DAF & IRA Distribution

How Donor-Advised Funds (DAF) Work

As a donor, you have the option of directing gifts to a charitable organization through a donor-advised fund. Your contribution to qualifying DAFs (often held at community foundations and large financial institutions) is treated by the Internal Revenue Service (IRS) as a charitable contribution at the time that it’s made. You then gain the flexibility of advising the DAF when and to which charitable organizations you’d like to make a gift. 

IRS regulations prohibit the donor, donor advisor, or the donor’s family member from receiving any benefit in excess of an incidental one as a result of a DAF distribution. A donor’s receipt of a benefit that is more than incidental (referred to as an “impermissible benefit”), may result in problems for the entity maintaining the DAF (e.g., loss of tax-exempt status) and/or the donor and/or family member (e.g., significant excise taxes). It could also put the charitable organization to which the gift was given at risk of losing future funding from the DAF.

For information regarding your legal or tax situation, please consult your own professional advisor.

For any additional questions, please contact our Director of Development at (704) 364-0016 Ext 1207.

Make A Tax-Free Donation to Solve M.E. Directly From Your IRA

As of 2021, an IRS provision allows retirees age 72 years and older to donate up to $100,000 tax-free from their IRA each year to a qualified charity, such as Solve M.E.

Generally, when you take a distribution from your IRA, it is treated as taxable income. Under this provision, the assets are excluded from income if the distribution is made directly to charity.

The distribution is not included in your income so you avoid all the effects that a regular IRA withdrawal creates, including taxes on Social Security benefits. Distributions excluded from income are also equivalent to a 100% deduction. Normally, charitable contribution deductions are limited to a lower percentage (or are eliminated altogether) for taxpayers who do not itemize and take the standard deduction. Contact your personal IRA administrator to initiate your charitable contribution.

Click here to download a sample letter to request IRA distribution.

Guidelines for Donating IRA Distributions To a Charity

IRA account owner must be age 72 or older at time of IRA distribution in order to take advantage of this provision. Rule applies only to Traditional, Rollover, and Roth IRAs. SEPs and SIMPLE IRAs are generally excluded. Distributions of non-deductible IRA contributions also do not qualify.

Maximum amount of a taxpayer’s qualified charitable distribution must not exceed $100,000 per tax year and may include required minimum distributions (RMDs).

Distribution must be made to a qualifying charity. Private foundations and donor-advised funds are not eligible. The Solve ME/CFS Initiative (Solve M.E.) is a qualifying 501(c)(3) nonprofit charity; Federal Tax Identification is 56-1683450.

The IRA Trustee or custodian must make the distribution directly to the charity. Distributions made payable to the IRA owner and transferred to the charity will not qualify.