There has been a great deal of discussion about the Secure Act 2.0 and the potential impact that it will have on the nonprofit sector. To quickly recap:
- The Secure Act 2.0 raised the age for RMDs to age 73. For those born in 1960 or later, their RMD will begin at
age 75. - QCDs can now be used to fund charitable remainder trusts (CRTs) and charitable gift annuities (CGAs), though with restrictions.
- Beginning in 2024, the annual limit for QCDs will be increased (indexed for inflation).
With an understanding of these changes comes an opportunity to begin tailoring messages to your donors and prospective donors on how to utilize these RMDs effectively to make charitable gifts. For those over the age of 70½, the conversation is fairly straightforward, as they are allowed to make a gift of any amount up to $100,000 to a qualified charity or charities tax-free this year.
In the majority of information written about QCDs and RMDs, the $100,000 figure is mentioned. However, from a marketing standpoint, it’s best to include the words “any amount” when referring to the $100,000 figure. From my experience as a planned giving fundraiser, as well as the small amount of research available, the vast majority of donors are not going to be maxing out their RMD for charitable giving purposes.
It is important that your marketing efforts encourage gifts of all levels, as giving often grows as a result of relationships built over time.
For instance, you could highlight an example of a hypothetical donor using their QCD over a five-year period at $5,000 or $10,000 a year to fund a major gift (This information could change based on your organization’s definition of a “major gift.”).
Each donor’s circumstances are different. Implementing marketing plans that reach a broad group—as well as targeting specific prospects based on your donor data—will increase the odds you will uncover donors who can make QCDs and other gifts.
Austin Chappell is a Sharpe Group senior consultant with experience in higher education. He is based in Dallas-Fort Worth, Texas. You can connect with Austin at austin.chappell@sharpegroup.org or via LinkedIn.
