To accommodate the needs of donors who wish to contribute to the University through qualified charitable distributions (QCDs) from an IRA account. To identify and address relevant legal and tax issues associated with QCDs.
May, 2023Responsible Office
The University will generally accept a charitable donation made through a qualifying charitable distribution (QCD). A QCD is a direct transfer from certain Individual Retirement Accounts (IRAs), including traditional, rollover, inherited, Roth, Simplified Employee Plan (SEP – inactive plans only) and Savings Incentive Match Plan for Employees (SIMPLE – inactive plans only). The QCD must be a direct distribution from an IRA custodian to the University. The University will acknowledge the contribution in accordance with Policy 2202, Gift Receipts.
Generally, a donor who is 70 ½ or older may exclude the amount donated as a QCD from taxable income, and the amount of the QCD can be counted toward satisfying a donor’s required minimum distribution (RMD). QCDs are limited to the amount that would otherwise be taxed as ordinary income. The maximum annual amount that can qualify for a QCD is $100,000 (indexed starting in 2024.) This applies to the sum of QCDs made to one or more charities in a calendar year. In addition, QCDs are limited to the amount that would otherwise be taxed as ordinary income. For a QCD to be counted towards a donor’s current year RMD, the funds must come out of the IRA by the RMD deadline, generally December 31. A QCD may be taken to fund a charitable remainder unitrust, charitable remainder annuity trust, or charitable gift annuity up to a maximum one-time amount of $50,000. Donors are advised to consult their tax advisors about these rules and their specific situations and to confirm tax treatment of QCDs under their state and local tax rules.
The direct distribution can be made either by making a request to the IRA Administrator for a direct electronic transfer or by using a check titled in the name of the IRA and made payable to the University.
All QCDs to the University must be made for charitable purposes. A gift for the specific benefit of a designated person (e.g. a care or service provider, student, faculty member or volunteer) will not be accepted.
QCDs may be received by the University subject to certain conditions as recommended by a donor and agreed by the University. A donor may also recommend, and the University may agree, that QCD gifts will be paid out over multiple years.
QCDs can be accepted by the University for projects that are carried on in other countries. However, a QCD cannot be made to any non-US University entity or affiliate.
Under federal tax law, a QCD cannot result in benefits, goods, or services to the donor, members of their families, businesses they control, or any other related parties (these are typically called “personal benefits”). Prohibited benefits include tickets, memberships, event tickets, meals, sponsorships, registration fees, preferred parking, preferred seating, discounted merchandise or other preferential treatment from the University. Failure to observe this restriction can subject the University and the donor to tax penalties. The University has established the following specific guidelines for events and memberships:
Consistent with federal tax law, the University does not permit donors to use a QCD to fund all or any portion of the purchase price of a table or ticket for an event when the table/ticket purchase comprises both a tax-deductible portion and a non-tax deductible (personal benefit) portion, even if the donor wishes to pay the non-deductible portion from a personal source.
To comply with federal tax law, QCDs for membership fees within the University will be accepted only if:
The membership benefits are limited to incidental benefits defined under then-current IRS rules. Current examples include free or discounted admission to low-cost events, parking, preferred access, and attendance at certain members-only events; or
The donor waives and declines all the non-deductible personal benefits, assuming that the membership offers, and can implement, the option to waive and decline such personal benefits.
The University can accept a QCD to satisfy all or any portion of a personal pledge or other financial obligation of the donor.
Upon receiving a QCD, the University will send a special gift acknowledgement to the donor providing the date of the QCD and stating that:
no goods or services were provided in exchange for the QCD;
the University is a qualified public charity and therefore may receive the QCD; and
the QCD is a gift to the University for general purposes or to a designated fund, and not to a donor advised fund or a supporting organization.