Most attorneys, accountants, and financial advisors are well-aware of donor-advised funds and the reasons behind their popularity. When a donor-advised fund is established at the Community Foundation, this vehicle is an excellent way for your clients to organize their charitable giving and get even more connected to the causes they care about.
Enter the Qualified Charitable Distribution
Your clients can give nearly any type of asset to a donor-advised fund at the community foundation. A notable exception, though, is the Qualified Charitable Distribution (QCD). A QCD allows a taxpayer 70 ½ or older to make a direct transfer of up to $100,000 annually from an IRA to a qualifying charity. A donor-advised fund is not considered to be a qualifying charity.
Although donor-advised funds cannot accept QCDs, CFHZ offers other types of funds that can accept QCDs. For example, scholarship funds and field-of-interest funds held at the community foundation are ideal recipients of QCD transfers. These fund types are sometimes overlooked, despite the high value they can deliver to your client and to the community.
What is an Unrestricted fund?
Our community is sure to change, and we need to be ready. The flexibility of a gift to the unrestricted fund allows the Foundation to use the expertise of our staff and widely representative Board to make the best possible community investments across a variety of issue areas for generations to come. Unrestricted funds are part of our Community’s Endowment, which ensures the Holland/Zeeland area will always have philanthropic resources to respond to future needs and opportunities as they arise.
What is a Field Of Interest (FOI) fund?
Field of Interest funds allow your clients to benefit from the expertise of CFHZ staff while also allowing them to identify an area of personal interest, such as the arts, education, human services, or youth. Within that area of interest, CFHZ identifies the best possible community investments for generations to come. Field of Interest funds are part of our Community’s Endowment, which ensures the Holland/Zeeland area will always have philanthropic resources to respond to future needs and opportunities as they arise.
What is a Nonprofit fund?
Nonprofit funds benefit a predetermined nonprofit by providing ongoing support. CFHZ handles investment management and administrative responsibilities, allowing the organization to focus on their mission. Your client can establish designated funds to support one or more organizations and provide long-term sustainable support.
What is a Scholarship fund?
Established to honor loved ones, inspire young people, and invest in the community’s future, scholarship funds are popular with donors who wish to honor or leave a legacy. Whether it’s academic success, financial need, community involvement, or a specific area of study, your client can help fulfill the educational dreams for the type of students they wish to support through a scholarship fund. CFHZ handles all the administrative details, from promoting the availability and processing applications to selecting deserving students and administering scholarship awards.
Quick QCD reminders
For the client aged 70 ½ through 72, a QCD removes funds from an IRA before the client reaches the age-73 threshold for Required Minimum Distributions (RMDs). This can lessen the eventual income tax hit that accompanies RMDs. And for RMD-applicable clients, the QCD counts toward their RMD. In both cases, the QCD transfers do not fall into the client’s taxable income.
We always encourage donors to first seek the advice of their legal, financial, or tax advisors when considering a gift of non-cash assets. While our team does not offer tax advice, we stay knowledgeable on charitable giving strategies. Please contact Colleen Hill, Vice President of Development & Donor Services, at chill@cfhz.org or by calling 616–994–8853 if we can help you serve your clients.