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  • 1.  QCD gift / Thanking the donor (Quid pro quo no go?)

    Posted yesterday

    Hi all,

    We received a sizeable Qualified Charitable Distribution donation from a donor's IRA in the fall of 2025 to establish an endowed scholarship in his wife's memory. I typically send a gift (e.g. any combination of nicely bound book / mug / sweater / embossed padfolio etc.) in thanks for a donation of this size, but hesitated as I wondered if there's a restriction / maximum amount associated with IRA gifts (is it similar to DAFs, where you can't give donors an item as it would be deemed a "benefit"?). Thanks for any insight you may have.



    ------------------------------
    Melissa Rufener
    Life Pacific University
    mrufener@lifepacific.edu
    ------------------------------


  • 2.  RE: QCD gift / Thanking the donor (Quid pro quo no go?)

    Posted yesterday
    I will address this in my annual presentation next week. However, the way the IRA distribution rules are written disallow any benefit - token or otherwise.

    That said, I cannot confirm that 100% of non-profit organizations withhold those token benefits.

    John

    John Taylor Principal, John H. Taylor Consulting, LLC 919.816.5903 Big ideas; small keyboard



    Original Message


  • 3.  RE: QCD gift / Thanking the donor (Quid pro quo no go?)

    Posted 11 hours ago
    I thought the rules for QCD distribution were that the entire contribution needs to be allowable under section 170, ie, the same rules that apply charitable contributions more generally. Token benefits would be disregarded, just as they are normally. 


    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:





    Original Message


  • 4.  RE: QCD gift / Thanking the donor (Quid pro quo no go?)

    Posted 10 hours ago
    Not according to the material I have read. 

    The IRS QCD material excludes all benefits. The main IRS references (Notice 2007-7 and Publication 590-B) state clearly "no (any) benefit." There's no reference to or mention of de minimis benefits being excluded. Therefore, unless you can find (I cannot) language that says those token benefits are allowed, we should assume they are not. Keep in mind that a QCD is not the same thing as a tax-deductible gift. Therefore, we cannot assume that the rules for tax-deductible gifts apply.

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 5.  RE: QCD gift / Thanking the donor (Quid pro quo no go?)

    Posted 8 hours ago

    I'm with Isaac on this. PG Calc explains it here. The standard token/de minimis benefits are allowed for QCDs. There are a couple of other important nuances to consider, and PG Calc outlines them well, so I recommend others see those further details in the article.



    ------------------------------
    Mike Fischer
    Sage70
    mike@sage70.com
    ------------------------------

    Original Message


  • 6.  RE: QCD gift / Thanking the donor (Quid pro quo no go?)

    Posted 8 hours ago
    We'll have to agree to disagree. PGCalc does not cite an IRS ruling specifically dealing with QCDs and allowable benefits. Until I see an IRS statement allowing token benefits for QCDs, I will advise against any benefits.

    That said, I acknowledged previously that some charities still provide those token benefits. That's their call. However, I'd never do so without permission from Counsel.

    John

    John H. Taylor, Principal
    John H. Taylor Consulting, LLC
    2604 Sevier Street
    Durham, NC     27705

    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 7.  RE: QCD gift / Thanking the donor (Quid pro quo no go?)

    Posted 8 hours ago
    Good link, Mike, thanks. John, here's how I understand it. The part of the US code that talks about QCDs, which is what I was vaguely remembering, is 26 USC 408(d)(8) 

    (B)Qualified charitable distributionFor purposes of this paragraph, the term "qualified charitable distribution" means any distribution from an individual retirement plan (other than a plan described in subsection (k) or (p))-
    (i)
    which is made directly by the trustee to an organization described in section 170(b)(1)(A) (other than any organization described in section 509(a)(3) or any fund or account described in section 4966(d)(2)), and
    (ii)
    which is made on or after the date that the individual for whose benefit the plan is maintained has attained age 70½.
    A distribution shall be treated as a qualified charitable distribution only to the extent that the distribution would be includible in gross income without regard to subparagraph (A).
    (C)Contributions must be otherwise deductible

    For purposes of this paragraph, a distribution to an organization described in subparagraph (B)(i) shall be treated as a qualified charitable distribution only if a deduction for the entire distribution would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph).



    Section 170 is the normal part of the IRS code that defines all of our rules on deductibility for all kinds of donations. That section has no explicit exception for token items, only for intangible religious benefit. 

    The origin of the token items exception is Revenue Procedure 90-12, which defines the 2% or inflation-adjusted amount for insubstantial items rule.It says that "under the following guidelines, charities offering certain small items or other benefits of token value may treat the benefits as having insubstantial value so that they may advise contributors that contributions are fully deductible under section 170." It then goes on to describe our beloved token exceptions math. There is no qualification on this ruling that says it applies to certain types of gifts but not others. 

    While the black-letter law says any benefit would count against the deduction, the administrative law enforcing it seems to carve out a materiality threshold. I guess I'm unsure why I would apply that threshold only to one type of donation and not another, but I do see your point John, that there is a sentence with QCDs that can be read as more restrictive. 

    My tax lawyer is coming to visit tomorrow, I'll ask him and update further if he has anything interesting to say. 

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:





    Original Message


  • 8.  RE: QCD gift / Thanking the donor (Quid pro quo no go?)

    Posted 8 hours ago
    It would be great to hear from your lawyer. I'd love to see some definitive!

    John Taylor Principal, John H. Taylor Consulting, LLC 919.816.5903 Big ideas; small keyboard





    Original Message


  • 9.  RE: QCD gift / Thanking the donor (Quid pro quo no go?)

    Posted 11 hours ago
    Edited by Melissa Rufener 10 hours ago

    Thanks John! I know you always address this but couldn't remember from (or find) your presentation from last year. Looking forward to seeing that!

    Thanks Isaac for the additional insight!

    Grateful,

    ------------------------------
    Melissa Rufener
    Life Pacific University
    mrufener@lifepacific.edu
    ------------------------------

    Original Message


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