Last week I shared how using Infographics can rev up your fundraising campaigns. This week’s topic isn’t nearly as fun, but it does have potential to increase giving from your retired donors. While this has big implications for donors giving up to $100,000, your smaller dollar donors can also take advantage of tax savings from this change to the tax code. I’m talking about the…
IRA Charitable Roll-Over
First of all, what is it?
Basically, donors 70 ½ years old can now make donations directly from their IRA without assuming the income and therefore not having to pay tax on top of that. Essentially, a donor can make, say, a $1,000 donation without also having to pay the income tax associated with withdrawing that amount from their retirement account.
Why 70 ½ years old?
Well, IRA holders are required to start withdrawing from their accounts at, you guessed it, 70 ½ years old. The IRA donations count towards their annual required disbursement, so this is a great way for retired donors to minimize their tax liability.
Prior to 2006, this wasn’t even an option. Starting in 2006 and through 2015, Congress passed last minute amendments to the roll-over rules, allowing the IRA donations. The problem for fundraisers is that these changes were often made very late in the year, often as a last minute bill in December, right before Congress left for vacation, leaving little time to get the word out.
But starting January 2016, Congress made this rule permanent, so organizations are now able to promote this method of giving throughout the year.
What do I do with this information?
Tell your donors about it! Most organizations are just starting to get the word out to their donors, so this is an opportunity for almost any organization. The good news is that this information carries well without requiring a fully dedicated direct mail package. Post cards and buckslips in existing mailings / bouncebacks can be effective. Email communication and even social media posts are also a great way to get the word out. Newsletter articles are another effective way to promote this benefit to your donors.
Since this information depends on a donor’s age, it’s a good idea to append that information to your file, so that you can effectively target your efforts. Additionally, since we are talking about tax liabilities, it is a good idea to use copy provided by a planned giving professional or have your materials reviewed by a tax professional for accuracy.
Sure, this isn’t likely a “game-changer” for most organizations. But it is another arrow in the quiver of the skilled fundraiser – YOU!