Prioritizing Donor Retention in Your Fundraising Strategy
Retaining donors is more cost-effective than acquiring new ones. Learn practical strategies nonprofits can use to improve donor retention and grow sustainably.
For retirees with a healthy nest egg in tax-deferred accounts, hitting age 73 comes with a new milestone: Required Minimum Distributions (RMDs). While it’s a sign of financial success, those RMDs can come with a not-so-fun side effect—higher taxes! The bigger your account balance, the larger your RMD, which could nudge you into a higher tax bracket.
But here’s the good news: if charitable giving is part of your financial plan, a Qualified Charitable Distribution (QCD) can be a game-changer. It’s a tax-smart way to support the causes you love while keeping Uncle Sam from taking a bigger bite out of your savings. Giving back has never been so rewarding!
QCDs allow individuals age 70½ and older to make tax-free donations directly from an IRA to a qualified charity, potentially satisfying all or part of their annual RMDs.
Generally, you can make a QCD from any tax-deferred IRA account, such as a traditional IRA, inherited IRA, SIMPLE IRA, or SEP IRA. However, a direct transfer of a QCD from a SIMPLE or SEP IRA can only be done if the account is inactive—meaning you’re no longer contributing to it. That said, the IRS does not allow you to make a charitable contribution from a workplace retirement plan, like a 401(k).
For tax year 2025, you can donate up to $108,000 (For married couples, you can each donate up to your individual annual limit). You can also use up to $54,000 in 2025 of a QCD to make a one-time donation to a charitable gift annuity (CGA) or charitable remainder trust (CRT).
A QCD doesn’t offer a tax deduction, but the QCD amount isn’t included in your taxable income either. In some cases, the tax benefits of a QCD could outweigh the charitable deduction you would have received from donating cash or other assets to an eligible charity.
Here is an example of when a QCD could make sense. Say you’re 75 years old and single, and you need $120,000 in income this year to cover your living expenses. Your RMD for the year is $110,000 and you’ll receive another $40,000 from a pension plan—pushing your total taxable income to $150,000. That leaves you with an additional $30,000 of income that you don’t necessarily need.
You could donate the excess cash to your favorite charity and write-off the amount on your tax return. But by using a QCD to transfer the $30,000 directly to a charitable organization, you could pay thousands less in income taxes instead. A much smarter and tax-efficient way to give.
Cash is not king here. If you take your full RMD and then donate cash, this will likely result in a higher tax bill than if you were to give through a QCD. Encourage your donors to talk with a tax professional or their financial advisor to see if a QCD makes sense for their situation.
jordan@lifelegacy.io
Retaining donors is more cost-effective than acquiring new ones. Learn practical strategies nonprofits can use to improve donor retention and grow sustainably.
If you need a single, compelling reason to prioritize planned giving this year, here it is: around 46 billion dollars flows to charities every year through bequests. In fact, the latest Giving USA numbers show that bequests in 2024 totaled about $45.84 billion—roughly 8% of all U.S. charitable giving for the year. That’s not a rounding error; it’s a transformative funding stream your mission can’t afford to ignore.
One of the most interesting parts of planned giving is that you never know what is going to happen! Planned gifts will surprise you. In an earlier blog, I talked about the planned gift that I DIDN’T accept. That was not even close to the most interesting gift that I ever received.
And this one isn’t either. But it was something I never expected.
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