The Qualified Charitable Distribution (QCD) is a familiar planning tool: A client age 70½ or older directs a distribution from an eligible IRA to a qualified charity, potentially satisfying all or part of a Required Minimum Distribution (RMD) while excluding the QCD amount from taxable income.
Do you know that a QCD can present an opportunity for a client to establish certain types of funds at Hudson Community Foundation (HCF)? Under current law, QCDs cannot be made to donor-advised funds. That sometimes leads advisors and clients to conclude that QCDs cannot be used to establish any fund. Fortunately, that is not the case!
See three fund types we offer for contributions from IRA’s:
Designated fund
A designated fund can provide ongoing support for one (or a few) charitable organizations selected by the donor at the time the fund is established. For example, a client who has faithfully supported a favorite museum, food bank, church, animal shelter, or other nonprofit for decades might use a QCD to establish a fund designed to continue that support over time. We are familiar with these types of funds and can assist the donor in selecting the charities most important to them.
Field-of-interest fund
A field-of-interest fund can support a broader charitable priority rather than a particular organization. For example, a client might establish a fund focused on early childhood education, the environment, the arts, services for older adults, or another area that has been meaningful throughout the client’s life. HCF uses the fund according to the charitable purpose the donor has established.
Unrestricted fund
An unrestricted fund can offer clients perhaps the broadest community impact. Rather than identifying particular organizations or causes, the client entrusts the community foundation to use the fund to respond to changing community needs and opportunities over time.
And more good news about IRA’s:
As you work with charitable clients who are age 70½ and older and own IRAs, please reach out! The team at Hudson Community Foundation is happy to help structure a fund or funds to accomplish each client’s charitable goals.
We look forward to hearing from you!
At Hudson Community Foundation (HCF), advisors can manage the charitable assets on their preferred platform at any amount. Assets stay under their management. You can provide your clients with the consistent investment advice they expect. We are your partner in charitable giving!
Click here to learn more about starting a charitable giving fund.
The team at HCF is a resource as you serve your philanthropic clients. We understand the charitable side and are happy to serve as a secondary source as you manage the primary relationship with your clients. This blog is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.
