Managing the different types of incoming Gifts in Virtuous is part of the journey a Gift takes. After you have created the Gift record, you will typically Receipt and/or Acknowledge that incoming Gift. Depending on the specific use case, sending an Acknowledgment may be more appropriate than a Receipt. According to the IRS, a Qualified Charitable Distribution is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity.
Donors may give from their IRA as a way to meet their required minimum distribution while lowering their adjusted gross income (AGI). This means that, as a benefit, this allows them to pay less in taxes without having to itemize them like they would for regular donations.
Now, acknowledging these Gifts is similar to acknowledging any regular Gift. There are rules on how Qualified Charitable Distributions can be made. With this in mind, it is important to document that these rules have been followed when acknowledging these Gifts.
Gift Entry
While the check will likely come from the IRA custodian, the Gift should be tracked on the actual donor's record. In other words, this should not be entered as a Passthrough Gift.
Example: Bob Smith has decided to contribute through his IRA with Charles Schwab. Your organization has received a check from Charles Schwab. The Gift would still be on Bob Smith's Contact record because he should still get a Receipt for this donation. Charles Schwab would not be entered as a Passthrough Giver, either.
When entering Gifts, those coming from an IRA are indicated using the Qualified Charitable Distribution Gift Type.
When you select Qualified Charitable Distribution as a Gift Type, the IRA Custodian field will appear:
It is important to mention the name of the IRA custodian in this specified field. This is because you will need to be able to pull and reference the name of the IRA custodian in your Receipt. Inserting that information into a field that can be used as a Merge Tag in a Receipt will make that easier.
Receipting
With Receipts requiring special language for IRA Gifts, make sure that you have a specific Query, Receipt Template, and maybe even a Receipting Group to manage these specific donations.
Build the Query: Because you enter IRA gifts as having the Qualified Charitable Distribution Gift Type, you can use this as a parameter (at minimum) for the Gift Query associated with your IRA-specific receipt. Refer to the example below.
To learn more about building a Query, check out this Support Article.
Create the Template: You can build your Receipt Template the way you would build any other. The only difference here is the required language and specific items to include.
- Name of the IRA custodian
- Keep in mind that the charitable contribution must be made directly from the IRA custodian or trustee in order to qualify as a QCD
- You can use the %IraCustodian% merge field here.
- Date of the Gift
- Amount of the Gift
- Note that the Gift is a Qualified Charitable Distribution under Sec. 408(d)(8)(A)
- State that no goods or services were provided in exchange for the Gift
- State the below:
- the purpose of the Gift; where the funds are going toward (in other words, the Virtuous Project) To learn more about using Projects in Virtuous, check out this Support Article.
- That your organization qualifies as a Sec. 170(b)(1)(A) public charity
- Your organization must be a 501(c)(3) charity in order to qualify to receive qualified charitable contributions.
- The Gift is not going to a Sec. 509(a)(3) supporting organization (private foundation) or Sec. 4966(d)(2) (donor-advised fund)
- Private foundations and DAFs do not qualify for qualified charitable contributions.
To learn more about creating Receipt Templates, check out this Support Article.
Generate Receipts: These will be generated the same way you generate any other Receipt - these simply have specific rules and templates to acknowledge IRA Gifts specifically.
To learn more about processing Receipts in Virtuous, check out this Support Article.
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