Economic uncertainty can make people rethink their charitable giving. But if you want to help meet the growing needs of nonprofits serving their communities, IRA gifts are a way to give and get a little back.
With high inflation and a looming recession, many Americans are adjusting their spending—and giving—habits. A majority of donors said they are being more cautious with their charitable giving now than a year ago, according to a recent survey from Dunham+Company.
But some people are striving to maintain their gifts at a time when nonprofits around the world are facing mounting challenges and need resources the most—people like Charles.
He used his IRA this year to support global communities during times of crisis, like Afghans through GlobalGiving’s Afghanistan Emergency Fund. IRA giving has become the preferred way to give for Charles and his wife. If you are 70.5 or older and have a traditional IRA, you can also donate to GlobalGiving directly from your retirement savings to maximize your impact and fuel community-led change—while unlocking potential benefits in the process.
Funds withdrawn from your IRA usually count toward your annual income, which increases your overall tax burden. IRA gifts are generally the exception since they aren’t recognized as income. A gift from your IRA to an eligible nonprofit organization counts as a qualified charitable distribution (QCD) and will be tax-free up to $100,000. Consider giving before Dec. 15 to beat the end-of-year rush for IRA custodians and help ensure that your gift can count for the current tax year.
For donors 72 and older who must take Required Minimum Distributions, an IRA gift can also count toward your RMD, without counting toward your taxable income for the year. If you’re required to take an RMD, this gift will help you avoid a hefty tax penalty (the IRS website has more information about RMDs).
If your goals include supporting a cause near to your heart, QCDs may be right for you and can make a real impact on the nonprofit you choose. When you donate from your IRA this year, you will be providing vital support to the causes you care about at a time when needs are great and other funding is tight.
You can save time filling out all the necessary forms from your IRA custodian with FreeWill’s secure online tool, or, print out what you need to get started offline.
IRA giving can seem complicated, but this resource and the GlobalGiving team can help you learn more about the process, potential savings, and possibilities for the nonprofit you want to support.
Featured Photo: End Period Poverty for 200 Girls in Kafue, Zambia by African Education ProgramNote: We recommend consulting a financial or tax advisor with any specific questions about how IRA giving may impact your personal situation. This article is informational in nature and should not be considered tax advice.
Find exactly what you're looking for in our Learn Library by searching for specific words or phrases related to the content you need.
