Talk to Donors About Qualified Charitable Distributions Now

Every fall, the campaigns go out. Nonprofit development teams across the country remind donors they can give directly from their IRA and avoid the tax hit from their required minimum distributions (RMDs). And every year, a meaningful share of donors reply with some version of the same sentence: “I wish I had known sooner. I already took my distribution.”

It’s one of the most preventable missed opportunities in nonprofit fundraising — and it isn’t a donor education problem. It’s a timing problem. One your organization has the power to fix.

What a qualified charitable distribution is, and why it matters

A qualified charitable distribution (QCD) lets IRA owners who are 70 ½ or older transfer money directly from their IRA to a qualified public charity. The transfer counts toward their required minimum distribution (RMD) for the year, and the amount is generally excluded from their taxable income.

The annual QCD limit rises to $111,000 per person in 2026, up from $108,000 in 2025. For married couples with separate IRAs, that effectively doubles — up to $222,000 directed to charity without generating a dollar of reportable income.³

Because a QCD is excluded from income, it can help some donors stay below Medicare Income-Related Monthly Adjustment Amount (IRMAA) brackets that raise premiums. Many households don’t itemize since the standard deduction has increased, and a QCD delivers a tax benefit without itemizing. That matters more in 2026 than ever.

The new tax landscape makes QCDs more compelling

The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, and effective in 2026, reshaped the economics of charitable giving for the donors that nonprofits rely on most — older, IRA-holding, philanthropically motivated retirees.

Beginning in the 2026 tax year, nonitemizers can deduct cash donations up to $1,000 for single filers or $2,000 for married couples filing jointly.⁴ But a new 0.5% floor now applies to itemized charitable deductions: Only contributions above 0.5% of adjusted gross income (AGI) are deductible.⁵ On top of that, itemized deductions for top-bracket taxpayers are now limited to a maximum tax benefit of 35 cents on the dollar, down from 37 cents.⁶

None of this applies to QCDs. The transfer goes directly from IRA to charity and is generally not included in the donor’s taxable income. The 0.5% floor is irrelevant, and the itemization calculus disappears — QCDs sidestep these new limitations because they are excluded from income altogether, not claimed as a deduction.

The “first dollars out” rule: Why timing matters

Here’s where timing becomes a structural problem. The IRS applies a “first dollars out” rule to IRA distributions. The first money that an RMD-subject investor withdraws each year is automatically applied to satisfy their RMD. If a donor takes their full RMD in February and then tries to make a QCD in November, the QCD doesn’t reduce the RMD they already took.

A donor who took their RMD in January — because their custodian prompted them to or because no one told them otherwise — cannot retroactively convert that distribution into a QCD. They can still make a QCD for additional amounts above their RMD, but the tax-offsetting benefit on distributions already taken is gone for that year.

The opportunity gap

The untapped QCD market would surprise most development professionals. A striking 76% of organizations say that fewer than 10% of their eligible mature donors made QCDs in 2025.⁷ The average QCD gift size was $4,000, and nearly seven in 10 organizations report that QCD gifts peak at the end of the year — likely driven by RMD deadlines.⁷ That year-end concentration isn’t a sign of success. It’s a sign that the conversation is likely starting too late.

Three integrated strategies to close the gap

1. Coordinate tax planning with donor outreach

The strongest case for a QCD is a tax-planning case. Donors managing Medicare surcharges, Social Security taxation, and income-based thresholds may benefit when a QCD keeps their taxable income lower. Equip your development team to explain the tax advantage plainly and provide a one-page QCD fact sheet that donors can hand to their advisors.

2. Build estate planning into the conversation

Not all charitable vehicles accept QCDs. A QCD cannot go to a donor-advised fund, a private foundation, or a supporting organization, and the donor cannot receive anything of value in return. For donors who want income from their gift, up to $55,000 of the 2026 QCD limit can fund a charitable gift annuity or charitable remainder trust. These estate planning structures may open meaningful conversations with donors who want to support your mission while maintaining a predictable income stream.

3. Strengthen investment management for gifts received

When QCDs arrive, your endowment or operating fund needs a plan for them. A clear investment policy statement helps your board deploy gifted assets consistently with your spending policy and risk tolerance. Treating QCD revenue as part of your year-round investment management process — rather than a year-end surprise — may support more stable, mission-aligned outcomes.

What proactive looks like: A year-round framework

The organizations that close the gap treat QCDs as a year-round program, not a Q4 campaign. Nonprofits that promoted QCDs at least four times throughout the year were more likely to raise $100,000 or more through that vehicle.⁸

In January, reach donors in the first two weeks with a clear, brief message about directing IRA gifts before their first required distribution. From February through April, when donors meet with their CPAs, include a QCD explanation in your newsletter and donor portal. Midyear, a single touchpoint can help donors who haven’t yet taken their RMD. In October and November, focus on mechanics and deadlines — remind donors that the deadline is Dec. 31, with no extensions, and to allow time for their custodian to process the transfer.

Donors who have already taken their RMD can still make a QCD. Their gift still matters, and the QCD amount is still excluded from income — it just won’t offset distributions already taken.

The qualified charitable distribution is one of the most tax-efficient giving vehicles available to the fastest-growing segment of the philanthropic population — and the tax changes of 2026 have made it more compelling than ever. The organizations that capture this giving are the ones that get ahead of it. Not in October. Not in November. In January — when the year’s RMD planning is just beginning, and the “first dollars out” window is still wide open.

FAQs

Where should we provide QCD instructions for our organization?

Donors and their advisors need your organization’s legal name, tax ID, and mailing address for the IRA custodian to process the transfer. Publish these details on a single, easy-to-find page linked from your giving page — many nonprofit websites bury QCD instructions several clicks deep, which makes it harder for advisors to act.

Who can donors talk to about whether a QCD fits their plan?

Donors can discuss QCDs with their CPA, tax advisor, or wealth advisor, who can evaluate how a QCD interacts with their RMD, Medicare premiums, and overall tax picture. Your development team can provide a QCD fact sheet that donors can share with their advisor to start that conversation.

What’s the difference between a QCD and a cash donation?

A QCD moves directly from an IRA to the charity and is excluded from the donor’s taxable income. A cash donation is made with after-tax dollars and may be deductible only if the donor itemizes. Under 2026 tax rules, new deduction floors and limits reduce the benefit of cash giving — but QCDs are not subject to those limits.

Can a QCD go to a donor-advised fund or private foundation?

A QCD must go to an operating public charity — it cannot fund a donor-advised fund, private foundation, or supporting organization, and the donor can’t receive anything of value in return. Donors who want to support your operating programs or designated endowment funds directly may be able to use a QCD, but the structure needs to be right.