Following recent tax reform, two giving solutions – Qualified Charitable Distributions and “bundling” – are expected to grow in popularity given higher thresholds for itemized deductions.
Qualified Charitable Distributions (QCDs)
People 70 ½ or older can give required minimum distributions from their IRAs by making them “qualified charitable distributions”, also known as QCDs. One requirement is that distributions must be made direct from the IRA plan administrator to the charity. These distributions can be used to create a charitable fund that supports your nonprofit and other nonprofits, or can be given directly to the nonprofit. People making the gift avoid recognizing IRA distributions as income while meeting required minimum distribution requirements. Up to $100K can be given annually.
This strategy describes how supporters can “bundle” two or more years of charitable contributions into one year to meet the new threshold required for itemization.
- A donor advised fund provides the ideal solution for this type of giving – you make your charitable gifts now and decide when and how much to give to charities later.
- People can give cash, or give long-term appreciated assets and avoid capital gains, one of many giving benefits that remain in place under the new tax law.
More about Implications of Tax Reform on Charitable Giving
The good news is that the charitable deduction came through the tax reform process relatively unchanged and was even enhanced for some donors making larger gifts.
- Because the standard deduction was increased for both individuals and couples filing jointly, fewer people are expected to itemize. As a result, the income tax deduction for contributions to charities will be unused by many.
- The new law makes no changes in provisions related to charitable gift annuities, charitable remainder trusts and other tax-qualified deferred gifts.
- For charitable gifts of cash, the amount that can be deducted each year was increased from 50% to 60% of AGI (30% remains the limit for appreciated property).
- Any gift amount that exceeds this threshold can be carried forward for five additional years.
Your Thrivent Financial Advisor can help you give wisely and in expanded ways. InFaith Community Foundation’s full range of giving options is also available to help your supporters make planned gifts to your nonprofit.