How to handle a conversation about your client’s QCD
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If you know the basics of Qualified Charitable Distributions (QCDs) but have a hard time envisioning exactly what to say and do when they come up in a client conversation, you are not alone! Whether you are an attorney, CPA, or financial advisor, at some point you will find yourself in the middle of a QCD conversation. Here’s a sample conversation to help you be prepared.
A Sample Client Conversation about using a QCD
Margaret, a 74-year-old widow and longtime client of your practice
Things to Know:
☑️ Margaret is now taking the required minimum distribution from her IRA due to her age
☑️ This is concerning to her because her taxable income is now higher than she expected or needed.
☑️ She wants to use her QCD to lower her taxable income by funding her donor-advised fund
You schedule a meeting with her to discuss options for her QCD.
Here is a sample conversation.
Margaret: “I’ve read about this thing called a Qualified Charitable Distribution. If I’m going to give to charity anyway, I want to understand whether doing a QCD in 2026 makes sense, especially if I want the gift to go through Central Florida Foundation where I already do all of my giving.”
You, the advisor: “A QCD does indeed allow individuals who are age 70 ½ or older to transfer funds directly from an IRA to a qualified charity without including that amount in taxable income. This can be especially powerful after age 73, when required minimum distributions begin, because the QCD can satisfy all or part of the RMD while keeping adjusted gross income lower. This can help address Medicare premiums, taxation of Social Security, and overall tax efficiency. With the annual QCD limit increasing through inflation adjustments to $111,000 in 2026, it’s a timely strategy to consider.”
Margaret: “I already have a donor-advised fund at the Foundation. Can I simply direct my QCD straight into that fund?”
You, the advisor: “That’s a great question, and you’re not alone in asking it. Under current IRS rules, unfortunately, QCDs can’t be made to donor-advised funds, even if they’re housed at a community foundation. QCDs are limited to certain types of charitable recipients. They can go directly to public charities that are ‘operating’ nonprofits, and in limited cases to certain split-interest arrangements like a charitable gift annuity or a charitable remainder trust, subject to specific rules. Donor-advised funds are excluded, evidently because the IRS does not want the money to flow into account where the taxpayer retains advisory privileges. Donor-advised funds are of course entirely dedicated to nonprofits, so the rule does not make a lot of sense. Yet here we are.”
Margaret: “That feels frustrating. I love my donor-advised fund because it gives me flexibility and lets me support multiple causes over time.”
You, the advisor: “I understand. The good news, though, is that the community foundation offers another type of funds that does qualify for QCDs and can still accomplish many of the same goals. An IRA Rollover Fund at Central Florida Foundation can support specific nonprofits or causes you already know you want to help. The fund is fully managed by the community foundation, without your advisory role after setup which makes them eligible recipients of a QCD while still aligning with your charitable intentions.”
Margaret: “I don’t want to make the wrong choice. I also want to be sure the fund is set up properly and really reflects what I care about.”
You, the advisor: “This is where I’d recommend looping in the team at Central Florida Foundation. They can help us think through the IRA Rollover Fund set up to find what fits best for you and your goals, provide a fund agreement document, and enable me to fulfill my professional duty to ensure that the structure complies with QCD rules. The Foundation knows the nuances of the fund options and the local charitable landscape. That’s a great match for the legal and tax obligations on my side of the transaction. Together we can help ensure that your QCD in 2026 is clean, compliant, and aligned with your values.”
Margaret: “That makes sense. I don’t want this to be just about taxes. I want it to be meaningful.”
By the end of the meeting, you and Margaret have agreed on next steps.
☑️ You will review Margaret’s IRA custodian requirements for executing a QCD
☑️ You would reach out to Central Florida Foundation to set up a joint meeting. The plan will allow Margaret to use her required minimum distribution to support the community she loves, reduce her taxable income, and create a charitable structure she feels confident about.
QCD Conversation: The Outcomes
Your client feels relieved. She didn’t have to navigate these tricky rules alone. You are building stronger relationships with your client.
You delivered a solution that satisfied both your client’s financial and charitable goals. By looping in the philanthropic professionals at Central Florida Foundation, you offer your client extended expertise and services.
Together, you and Central Florida Foundation can turn a confusing tax rule into a thoughtful charitable strategy that supports both Margaret’s personal financial goals and the broader community she intends to impact. If Margaret’s situation sounds familiar, or if you anticipate any type of charitable giving conversation with a client, we’re here for you! We are always happy to collaborate as you explore solutions to achieve your clients’ charitable goals. In nearly every situation, we can help. At the very least, we will point you in the right direction. Thank you for the opportunity to work together!
Pro Tip:
As you talk with clients over the coming weeks, keep in mind that tax laws are always subject to change–and sometimes for the better. Case in point related to Margaret’s situation? A small, bipartisan tax law change has been proposed that would allow QCDs into donor-advised funds. Fingers crossed!
Vice President of Philanthropic Strategies and Partnerships
sjerina@cffound.org | 407-872-3050
