If you are 70 ½ and older, by now you’ve likely heard about a charitable giving tool called a Qualified Charitable Distribution (“QCD”), allowing you to direct a distribution from your IRA to an eligible charity, such as a designated fund, unrestricted fund, or field-of-interest fund at the FM Area Foundation. With a 2025 limit of $108,000 per taxpayer, QCDs count toward required minimum distributions (RMDs) but are excluded from taxable income, which can help you avoid higher tax brackets and phaseouts of deductions.
The FM Area Foundation team is here to help you make the most of charitable giving tools, including QCDs. A frequently asked question about QCDs is whether they can be used to add money to a donor-advised fund. The answer is no, for now. While most public charities qualify as QCD recipients, donor-advised funds, private foundations, and supporting organizations do not under current law. Recently proposed legislation, however, aims to further expand QCD eligibility by allowing distributions to donor-advised funds.
If enacted, this change would give you and other eligible donors even more flexibility in maximizing your philanthropy. Indeed, a donor-advised fund is often the “hub” of a family’s charitable giving because it makes it so easy to stay organized and track support to favorite charities over the years. It’s becoming common for a family to add to its charitable giving “portfolio” by establishing a designated or field-of-interest fund alongside the donor-advised fund, as well as giving to the FM Area Foundation’s initiatives through the donor-advised fund. In many cases, family members also update their estate plans to include bequests to their funds at the FM Area Foundation.
A QCD is a wonderful tool, and we’ll keep our fingers crossed that it becomes even more wonderful. As always, the FM Area Foundation will keep you posted on this and other tax law changes that may impact your plans for supporting your favorite causes and the community we all love.
