QCDs: 4 marketing tips to get more IRA Charitable Rollover gifts this year

Every day, 10,000 Baby Boomers turn 70.5 — the age they can start making gifts out of their traditional IRA accounts. These gifts, called Qualified Charitable Distributions or IRA Charitable Rollover gifts, are usually much larger than your average cash gift, and one of the fastest growing areas of philanthropy. And, bringing in more of these gifts doesn’t require much extra effort for your giving teams. Nonprofits who market QCDs just twice a year are 1.4 times more likely to get these gifts than those who don’t market them at all.

Why? Most folks have never heard of or are overwhelmed by the process of making a gift from their IRA. And, many don’t realize that they come with huge tax benefits. Those with a traditional IRA are required to take out a certain amount from their account each year, called a Required Minimum Distribution (or RMD). If they don’t withdraw the full amount, they face a large tax penalty of 50% on that total. To avoid this, they can donate their RMD — unlike cash withdrawals, QCDs are completely untaxed.

By simply explaining the process and benefits of making these tax-free gifts, you can increase donor awareness, and become a more effective fundraiser. This is easy to do when QCDs are built into your marketing strategies from the start.

Here are four marketing tips to help you secure more IRA gifts this year:

1. Survey your donor base to find prospects.

To make a QCD from a traditional IRA account, your donors have to be over 70.5, so your first step is figuring out who’s eligible to make these gifts. If you don’t have age data on your donors already, the best way to collect it is by sending your entire marketing database a survey. This is also a great way to steward your supporters by showing them that you care to learn more about who they are, and why they support your organization.

If your organization is comfortable with it, you could ask your donors their age in the survey and whether they have a traditional IRA. Or, you can frame your question in a softer way. For example, you can say: “Are you over 70.5 and interested in learning about tax-free ways to give?”

For anyone that answers yes to that question or indicates that they’re over 70.5, mark them in your database as QCD prospects. This is your target list of prospects. You can send them outreach specifically about QCDs and their benefits, and cultivate relationships with those who express interest.

2. Create a page on your website strictly for QCDs.

In research for our latest QCD report, we found that 52% of QCDs came directly from a nonprofit’s website versus a link in an email. This means that nearly half of your QCD donors head directly to your site with the intention of making a gift. If you don’t want to lose them, you need to make it easy and intuitive for your donors to give by creating a webpage dedicated to them.

And, on average, it takes more than an hour to find and fill out the correct forms from a financial custodian. By simplifying the process, you’ll get more gifts and potentially capture those who didn’t complete gifts because they felt confused or overwhelmed by the paperwork.

On this page, you’ll want to include:

• Easy-to-understand information about what QCDs and RMDs are
• An outline of the tax benefits for QCDs vs cash gifts
• Step-by-step instructions for making a QCD
• FAQs about recent legislation or more complex aspects of QCDs (you can find this information in our 2021 QCD Report)

Another thing to consider is that IRA custodians don’t include donor information when making the gift transfer. In some cases, gift officers are able to follow up in order to get this information. But, the process can be time-consuming, and even more frustratingly, some custodians may refuse to share donor data.

To solve this, include a form to collect your donor’s contact information, gift size, and what IRA custodian they’re using. When they complete the form, send them an email with a PDF, or simply to another page where they can get the right forms for the IRA custodian they selected as well as step-by-step instructions for filling out the forms and mailing them in. This will mean  that you can immediately thank donors for making a QCD gift, or follow up with those still in the process to see if they need help completing their forms.

A great example of a QCD donation page is on the American Red Cross website. They answer common donor questions, and explain the tax benefits in simple, easy-to-understand language.

3. Market QCDs at least twice a year.

If you want to bring in more QCDs this year, you’ll need to reach out to your prospects more than once. Of the nonprofits we surveyed for our 2021 QCD Report, 86% received gifts after marketing QCDs just two times last year. They also received 39% more gifts on average. And every single respondent who said their organization marketed QCDs four or more times reported receiving at least ten gifts last year — the vast majority receiving more than 25 gifts on average.

That being said, it can be tough to squeeze in QCD marketing in an already packed fundraising calendar. One way to solve this is to include QCDs in all your fundraising appeals by listing them as one of several ways to give, or as a giving option for those over 70. If you have the capability in your CRM, this could double as a way to continue collecting age data on your donors if you can record anyone who clicks on this link as a potential prospect.

If you have the resources to send targeted outreach emails, make sure to keep them short and simple. You'll want to define QCDs, who can give them, briefly highlight the tax benefits donors would receive, and include a link to your QCD donation page.

Below is a great example of a targeted email sent by Paul Smith’s College. They outline the criteria for making QCDs in a few sentences, and link to their donation page for more information.

4. Ask your previous QCD donors at the right time to secure recurring gifts.

Not only do they want to make a bigger impact at your organization, they also have to take RMDs each year. If IRA holders don’t withdraw the full amount of their Required Minimum Distributions, they face a large tax penalty of 50% of the RMD amount. This gives them an incentive to donate that income in order to avoid paying more in taxes.

To meet their RMDS, past donors tend to give at specific moments throughout the year. Consider sending outreach to past donors along the following cadence:

• Beginning of the year: Many people choose to give QCDs in January. These are proactive folks who want to ensure they’ve met their RMD for the year.
• Tax time: During this time, donors are more aware of their financial situation (including IRA taxes and RMDs), and will be more receptive to learning about ways to save or lower their taxable income.
• At the end of the year: People are more charitable at the end of the year overall, but QCD donors may also be more likely to make this gift in November or December to meet their RMD before December 31st.
• On their QCD anniversary: Previous QCD donors often choose to give at the same time each year as part of their financial planning. You should reach out at least six weeks before their “QCD-versary” to remind these donors how they can meet their RMDs again with a tax-free gift from their IRA.

As stated earlier, remember to include QCDs as one of your “ways to give” in all of your appeals, to make sure you’re not missing any prospective donors.

Ready to begin accepting QCDs at your organization? FreeWill can help.