By Mary P. Walker, Petrus Blog Contributor
I love the TV show The Profit. Marcus Lemonis, a serial entrepreneur, invests in struggling businesses and offers advice on how to turn things around. Often even small adjustments in managing people, capital, or processes yield amazing results.
Following Marcus’ lead, I’m proposing a small tweak in your development efforts that could pay off big time! With just a bit of effort and minimal expense, you can educate and invite your partners in ministry to consider gifts from their IRA Required Minimum Distributions (RMDs).
The idea behind RMDs is that the government usually requires a person to “spend down” a retirement fund over the course of his or her life (exception, Roth IRAs). Of course, the government can’t predict when a particular person will die (and I for one am happy about that!), but it can use data to estimate a life expectancy. The amount a person is required to “spend down” by taking money out of the fund each year depends on (1) how much is in the fund; (2) how much longer the person is expected to live.
Imagine that you have a potential benefactor who is over 70 years old. Her pension, social security, and a traditional IRA let her pay her bills and enjoy a comfortable lifestyle. As the end of the year approaches, she may not have “spent down” her IRA enough. If not, she will need to withdraw more money, at least up to the level of the Required Minimum Distribution (RMD) from her IRA. If she doesn’t, she could be liable for significant taxes.
Wouldn’t you like to offer her a way to invest in your mission AND avoid tax liability? Of course you would!
Disclaimer: I am not an accountant or lawyer. Anybody considering donating all or part of their RMD should consult to their financial advisor for a complete understanding of the process and ramifications. BUT I DO KNOW about the transforming power of RMDs when they are donated to charitable organizations.
Here are some facts about RMDs from none other than the IRS:
These funds to charity “count” toward the RMD, but do not count as taxable income, as they otherwise would. If you itemize, you cannot take this charitable gift as a deduction.
Let’s do just a bit of simple math:
Assume a person is 75 years old and has $500,000 in a traditional IRA.
According to the IRA worksheet, their RMD would be almost $22,000! Imagine the impact if even half of this would be gifted to your ministry…! And, imagine the impact if you have two, three, five, or ten potential benefactors in a similar situation!
Get the Word Out!
So, how can you get the word out to your potential benefactors? Some ideas:
According to my FAVORITE fundraising educator, Tom Ahern, the typical benefactor is 75 years old. That means he/she is probably retired, or is married or widowed to someone who is or had retried.
Over 40 million households have IRAs. Surely some of them already support your ministry. Invite them to have a greater impact.
What are you waiting for?
Mary P. Walker is a member of the Petrus Blog Contributor Program. She has published hundreds of articles in Catholic and secular publications. After a career in technical marketing with IBM, she was the communications specialist at St. Mary’s Catholic Center at Texas A&M for nearly ten years. During that time, the base of donor support grew five-fold. Presently, she serves on three nonprofit boards.
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