FundSvcs Community

Hi there, just had same situation happen- receive redemption check from donor, but not sure if it is a QCD or not. Vanguard said they cannot give this info out unless we are the donor, so I guess there is no way to know for sure unless the donor tells us. 

Hi Frances,

The good news is that a nonprofit is not obliged to know whether a distribution is from an IRA or whether it would qualify as a QCD.

The most basic solution is simply to provide your standard receipt that includes language like, "no goods or services were provided in exchange for this contribution." The rest of the mechanics of a donor properly accounting for QCDs on their tax forms is up to them, entering the right information in the right boxes (which is quite simple - see here from the IRS). In fact, QCDs are subject to maximum annual limits, and there is no way for a nonprofit to ever know if a donor has made distributions over that limit or not, so it's best for a nonprofit to avoid any indication that the gift is a QCD. 

Here, the IRS confirms that the donor simply needs "the same type of acknowledgment of your contribution that you would need to claim a deduction for a charitable contribution." That means there are no special requirements from the IRS for a nonprofit acknowledging a QCD.

Here's one lawyer's take. You can see they are only emphasizing the normal receipt.

There is an obligation on the donor that the fund be distributed from their IRA administrator directly to the charity. So, some folks like to go the extra mile and indicate that on the acknowledgement. But it is not required, and it does introduce some extra effort in your acknowledgement process. For example, you could include on all receipts a line that says 'thanks for your gift, which we received from [name of institution that sent us payment]'. Or you could use a field in your system to indicate IF the payment was clearly labeled as from an IRA, and then you'd segment those transactions and only include that line on those. But none of this is necessary, and as Yana pointed out with one example, Vanguard didn't indicate whether the payment was from an IRA.

So, I'd just stick with a normal receipt. If a donor asks, you can provide written confirmation that you got the payment directly from their administrator. But this is unlikely to happen, and even if it does, it's not technically your obligation to affirm it, though it wouldn't be hard if you have fields in your system that say who the payor was or you keep copies of the 'paperwork' that came with the payment.