Summary: Qualified charitable distributions (QCDs) enable donors to support worthy causes and reduce their taxable income by giving directly from IRAs to small nonprofits. The right tracking, acknowledgement, and marketing strategies can turn QCD giving into a reliable, long-term revenue stream. In this article, we provide simple tips that can help small nonprofits maximize these strategies and build relationships with QCD donors.
In a previous blog, we introduced the concept of qualified charitable distributions (QCDs). A QCD is a tax-free transfer of funds directly from a traditional IRA to a qualified charity. Because the donor never receives the money through their bank, it’s not considered taxable income.
QCD allows donors to give from an IRA and apply QCDs to satisfy their required minimum distributions (RMDs) without increasing their taxable income. For small nonprofits, this is a potentially valuable revenue stream.
Let’s discuss how small nonprofits can track QCDs in their customer relationship management (CRM) system, how to acknowledge QCD gifts to avoid confusion, and marketing strategies that enable nonprofits to bring in more QCD gifts!
Tracking QCDs in Your CRM
When you have the right process in place to track QCDs in your nonprofit CRM (like Eleo), reports are more accurate, donors feel more valued, and future marketing strategies are more effective. Here are a few simple tips to make sure you have the right data in the right place with the right context.
Record the gift under the individual donor (not the financial institution).
Even if the check says World’s Best Bank, the gift belongs to John Q. Donor. Add the donor as the primary contact and include the financial institution as a note or soft reference, not the donor record.
Also, be careful with soft credits. QCDs are not third-party gifts so do not soft credit the financial institution. Full credit for the gift goes to the individual donor.
Use a clear designation or tag.
Create a consistent identification system for QCD gifts. This helps with reporting, targeted follow-up, and future segmentation of your donors. For example:
- Campaign: QCD Giving
- Appeal: IRA Distribution
- Custom field or tag: QCD
Add internal notes for clarity.
Entering extra notes now can prevent confusion later. Include notes like: “Received via IRA Qualified Charitable Distribution from Vanguard.” Leave nothing to chance!
QCD Acknowledgement: What to Say and Not Say
This is where small nonprofits get tripped up because they talk about tax deductions.
QCD donors are not claiming a charitable deduction. They’re excluding the taxable income by moving money straight from the IRA to your nonprofit.
Your acknowledgment should include:
- Gift amount
- Date received
- Donor name
- Statement that no goods or services were provided
- Example: “Thank you for your generous gift of $1,000 received on March 1, 2026. No goods or services were provided in exchange for this contribution.”
Your acknowledgement should not include:
- Any language that references tax deductions.
- Example: “This gift is tax-deductible.”
Remember, the individual donor gets the receipt and the credit, not the financial institution, regardless of the name on the check.
QCD Marketing for Small Nonprofits
Most small nonprofits don’t market QCDs because they’re intimidated by the complexity of taxes and financial accounts, or they just don’t know about them. Here are a few tips for overcoming that fear and offering a giving option that benefits your nonprofit and your donors!
Keep the message simple.
Do not lead with the term “QCD.” Lead with the benefit to the donor – “If you’re 70 ½ or older, you may be able to give directly from your IRA and reduce your taxable income.”
Then introduce the concept of QCDs in simple terms. Educate them with very basic information and encourage them to speak with their accountant and financial advisor for professional advice.
Market QCDs during key times of year.
The greatest opportunity to land QCD gifts is through year-end fundraising. Also, consider the beginning of the year when donors are planning their RMDs and meeting with their accountants about taxes.
Segment your audience for QCDs in your CRM.
Prioritize owners age 70 and older who are recurring donors, major donors, and/or long-time supporters. This segment is most likely to give through QCDs.
Host QCD educational events.
Consider hosting an annual event with an accountant and/or a financial advisor to educate your donors. Although people must be 70 ½ years old to give through a QCD, invite anyone who is interested. For example, they could be in their 60s and planning retirement, or they could have parents who are eligible. The more clarity and comfort they have with the concept, the more likely they’ll be to give!
QCDs Are a Major Growth Opportunity for Small Nonprofits
QCD donors are often loyal, financially capable of giving, and interested in smart ways to give that offer a financial benefit, like reducing taxable income. With the right tracking, acknowledgement, and marketing strategies, your small nonprofit can make QCDs a reliable source of long-term revenue!
