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Managing Donations

Qualified Charitable Distributions

A brief overview on Qualified Charitable Distributions, soft credit donations, and the differences between them.

A Qualified Charitable Distribution (QCD) is a distribution of funds from an IRA (except a SEP or SIMPLE IRA) directly to a qualified charitable organization, such as your church. Because you receive the gift directly from a donor's account, the amount they donated may be excluded from their taxable income up to a maximum of $100,000, with some exceptions. That's a great incentive for your members to donate!

To qualify for a QCD, the donor must:

  • Be at least 70 1/2 years of age, even if they're not subject to Required Minimum Distributions (RMDs) yet.
  • Have the same type of acknowledgment of their contribution that they need to claim a deduction for a charitable contribution.

If you meet all the requirements, a QCD is nontaxable and you can't claim a charitable contribution deduction for a QCD. In MinistryPlatform, you can display QCDs as nondeductible gifts on statements like the Donor Standard Statement. This will help your donors prove that they gave QCDs from their IRA and ensure they are not taxed on the IRA distributions.

Note: While donors must be at least 70 1/2 years of age to qualify for a QCD, MinistryPlatform processes do not assess whether your donor is actually 70 1/2 years old. This means that QCDs won't automatically display on a statement just because a donor is 70 1/2 years old. To display a QCD in a MinistryPlatform statement, you must have the payment type and the donor must be a person (not a foundation, like a soft credit donation).

Soft Credit Donations

A soft credit donation is a donation where the donor gives someone else credit for their donation, like someone making a donation on behalf of their foundation. Soft credit donations are used to recognize people who may have influenced a donation, even if they didn't directly give the money. Soft credit donations are not entitled to a tax deduction.

Be sure to contact your tax advisor for more information.

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Last updated: November 12, 2024