Balancing Impact and Income: Philanthropy Trends for High-Earners

June 2025

As a financial planner, I work with many successful individuals who care deeply about how they use their money. They don’t just want to grow their wealth—they want to make a difference in the world too. But they also don’t want to give in a way that puts their future at risk.

That’s why more and more people are giving to charity with a plan. Instead of writing a check once a year or donating when something big happens, they ask, “What’s the smartest way to give?” The goal is to support the causes they care about while staying on track with their financial goals. Strategic giving allows them to do both.

One of the most powerful tools available for this kind of smart giving—especially for people in or near retirement—is something called a Qualified Charitable Distribution, or QCD.

Let’s take a closer look at what a QCD is, how it works, and how it can help generous people give more effectively while saving on taxes.

What Is a Qualified Charitable Distribution (QCD)?

A Qualified Charitable Distribution is a way for people aged 70½ or older to give money from their Individual Retirement Account (IRA) directly to a charity. When they do this correctly, that money does not count as taxable income.

Here’s why this matters:

When people retire, they often start taking money out of retirement accounts like IRAs. The government requires them to take out a certain amount each year starting at age 73. This is called a Required Minimum Distribution (RMD). The money withdrawn counts as regular income and is taxed.

But what if someone doesn’t need that money to live on? What if they’d rather donate it to a cause they care about?

That’s where a QCD can help. Instead of taking the money out and paying taxes, they can have it sent directly to a charity. It still counts toward their RMD, but they don’t have to pay taxes on it. It’s a win-win: the charity gets a donation, and the person avoids extra taxes.

Important Rules to Follow

To make sure the donation counts as a QCD and gets the special tax treatment, there are a few key rules:

• You must be 70½ or older at the time you make the donation.
• You can give up to $100,000 each year from your IRA through a QCD.
• The money must go directly from your IRA to the charity. You can’t take it out and send it yourself.
• Only certain charities qualify. The organization must be a registered 501(c)(3) public charity. Private foundations and donor-advised funds don’t count.
• QCDs can only be made from IRAs. You can’t do this from a 401(k) or other retirement plans unless you roll those funds into an IRA first.

These rules are important. If you make a mistake—like taking the money yourself before donating—it could become taxable income, and you would lose the tax benefits.

People who have saved a lot in their retirement accounts often face large Required Minimum Distributions when they reach their 70s. These withdrawals can push their income higher, which might:

• Increase how much they owe in taxes,
• Raise their Medicare premiums,
• Cause more of their Social Security benefits to be taxed.

QCDs help avoid those problems.

 Here’s an example:

Let’s say David is 74 and has a large IRA. His RMD this year is $60,000, but he doesn’t need that money. If he takes it, he’ll pay taxes on the full amount. Instead, he uses a QCD to send the $60,000 directly to a charity he supports. This way, he meets the RMD requirement and avoids adding that $60,000 to his taxable income.

This doesn’t just help David. It helps the charity too, because they receive the full amount with no taxes taken out.

The Power of the $100,000 Limit

Each year, an individual can donate up to $100,000 through a QCD. For a married couple, if both people are over 70½ and have their own IRAs, they can give up to $200,000 total in one year.

This is a great way to support big causes or multiple charities—especially if you’re trying to make a major impact without triggering a tax burden.

Even better: QCDs are helpful even if you don’t itemize your deductions on your tax return. That’s because they lower your income directly instead of working like a normal tax deduction.

For many retirees, this means they can still benefit from giving to charity even if they use the standard deduction on their taxes.

Real-Life Benefits of Using a QCD

Qualified Charitable Distributions can be part of a bigger financial plan. Here are some of the ways people use them:

1. Meeting RMDs Without Taking the Cash: If someone doesn’t need the money from their RMD, a QCD allows them to avoid the income altogether while doing something good with it.

2. Reducing Taxable Income: Because QCDs don’t count as income, they can help reduce overall taxes, keep someone in a lower tax bracket, or even prevent other tax-related costs (like higher Medicare premiums).

3. Giving More to Charity: When you donate through a QCD, 100% of the money goes to the charity. If you took the money out and paid taxes first, the charity would get less—and you’d owe more.

4. Helping Your Estate Plan: QCDs are also a good way to reduce the size of your taxable estate while seeing the results of your giving during your lifetime.

Things to Watch Out For

Even though QCDs are simple in concept, there are some common mistakes to avoid:

• Don’t take the money out yourself. It has to go directly from your IRA to the charity.
• Make sure the charity qualifies. Not every organization is eligible.
• Track your paperwork. Even though your IRA custodian will send a tax form (Form 1099-R), it won’t say it was a QCD. You or your accountant must report it correctly.
• Know that you can’t double-dip. You can’t also claim a deduction for a QCD—it’s already tax-free, so you don’t get another write-off.

A Giving Strategy That Works for Everyone

Whether you want to give $1,000 or $100,000, a QCD is a great way to make your giving go further. It’s especially powerful for people who:

• Are over age 70½,
• Have more retirement savings than they need,
• Want to lower their taxes,
• And care about making a real difference through their giving.

Final Thoughts: Giving with Purpose and Confidence

Helping others doesn’t mean you have to give up your own security. In fact, when giving is part of a smart financial plan, you can do more good—for both yourself and the causes you care about.

Qualified Charitable Distributions offer a unique way to give generously, reduce taxes, and meet your retirement obligations all at once. For high earners and retirees, they can be one of the most effective tools in the financial toolbox.

 As a financial planner, I help clients figure out how to give wisely. That means helping them find the right time, the right method, and the right amount—so their giving fits naturally into their life and goals.

If you or someone you know is approaching age 70½ and wants to give more without paying more in taxes, now is a great time to explore how a QCD can help.