Your 2026 charitable checklist, keep going with donor-advised funds, and a QCD case study
Happy New Year!
We are honored to kick off another year working with so many attorneys, CPAs, and financial advisors to help you serve your philanthropic clients.
There’s a lot trending as 2026 rolls in! Our team closely watches for developments impacting charitable giving. We share the curated highlights with you, which saves you time as you keep up with everything else related to your clients’ tax, financial, and estate planning matters.
Here’s what’s happening as the new year dawns:
Don’t get caught off guard by 2026 tax adjustments—including Social Security COLA increases, higher standard deductions, updated tax brackets, QCD limits, and new non-itemizer charitable deductions. Each of these changes can impact which charitable strategies you recommend to your clients. The MCF is here to help translate technical tax changes into meaningful charitable outcomes for your clients. Read More
Even after the flurry of “bunching” activity at the end of 2025, donor-advised funds remain a powerful planning tool despite the new charitable deduction floor and cap that took effect in 2026. Donor-advised funds at the Morton Community Foundation are especially valuable to your clients thanks to our team’s local expertise, the administrative simplicity we offer, and our ability to support a client’s evolving legacy and estate planning goals. Read More
We are always happy to share realistic case studies illustrating how Qualified Charitable Distributions can reduce a client’s taxable income while supporting meaningful philanthropy in retirement. Notably, our team is happy to provide examples of language you can use to explain to a client why QCDs cannot flow into donor-advised funds and how alternative MCF fund options can still meet the client's goals. Work with our team to turn complex tax rules into compliant, values-driven charitable strategies. Read More
The Illinois Gives Tax Credit Act continues to offer a meaningful incentive for charitable giving in our state. An additional $5 million in tax credits is available for 2026, providing donors the opportunity to receive a state income tax credit while supporting the causes they care about. In 2025, it took nearly the entire year for all credits to be used, but interest is growing, and we expect the available credits to be claimed more quickly in 2026. Because these dollars are limited and awarded on a first-come, first-served basis, please let us know if you’d like to discuss how you might benefit from this opportunity. CLICK HERE to learn more.
The Caterpillar Foundation proudly supports its employees, U.S. retirees, and board of directors through the year-round Matching Gifts Program.
Annual Match Limit: Eligible Caterpillar participants can request up to $10,000 per calendar year in 1:1 matches to eligible charities.
MCF Eligibility: The Morton Community Foundation (MCF) is an approved charity. This means you may request matching funds for gifts made to either the MCF Operating Fund, or any of the many qualified funds at MCF. CLICK HERE for a list of funds.
Exception: Non-Endowed Donor Advised Funds (Donor Choice Funds) at MCF are not eligible for a direct match. Adding money to your DCF does not qualify for the Caterpillar Foundation Match. Instead, you may apply for the match each time you recommend a grant from your DCF to a qualified nonprofit.
For full details and to submit a request, CLICK HERE to visit the Caterpillar Foundation Matching Gift website.
As always, we are grateful for the opportunity to work together! Enjoy the holidays, and thank you for all you do for our community.
Scott Witzig, Executive Director
Darcy Roecker, Administrative Manager
info@cfmorton.org • 309-291-04
What’s new in the numbers: A checklist for charitable tax rules in 2026
What’s new in the numbers: A checklist for charitable tax rules in 2026
Well before 2025 made way for 2026, you were no doubt already tracking the various IRS thresholds that are subject to adjustment, as well as the new tax laws’ impact on planning techniques. But have you thought about how each of these thresholds might relate to your clients’ charitable giving? Here are pointers to keep handy as you inform your clients about changes in 2026 and help them tee up their charitable giving plans for the coming year.
Social Security COLA increases
The Social Security Administration announced a cost-of-living adjustment (COLA) increase effective January 1, 2026. This increase reflects inflation’s trajectory and affects many retirees who also engage in philanthropy.
Importance to charitable giving: Retirees are a unique group when it comes to tools and techniques related to charitable giving. Given that a high percentage of older cohorts give to charity each year, discussing your clients’ Social Security benefits is a logical juncture to also bring up charitable giving plans for 2026 and beyond
Standard deduction increases
For tax year 2026, the standard deduction increased to $16,100 for single taxpayers, $24,150 for heads of households, and $32,200 for married couples filing jointly.
Importance to charitable giving: The standard deduction is a key factor in charitable giving strategies. If a client’s total itemized deductions—including charitable gifts—exceed the standard deduction, they are eligible to itemize. Reviewing this threshold and considering a “bunching” strategy (accelerating multiple years of giving into one tax year) can help maximize charitable support through 2026 and beyond.
Tax brackets
Though the tax rates remain at a range from 10% to 37%, the income levels that define each bracket for 2026 have shifted.
Importance to charitable giving: Examining tax brackets with clients presents a timely opportunity to discuss their charitable giving strategies. With the new limitations on itemized deductions that took effect in 2026 (specifically the 0.5% floor and the 35% cap), it’s important to help clients plan carefully so that their philanthropy remains tax-efficient.
Qualified Charitable Distributions (QCDs)
For tax year 2026, the per-taxpayer limit for Qualified Charitable Distributions (QCDs) has been increased for inflation to $111,000, up from $108,000 in 2025. And, the limit for a one-time QCD from an IRA to a split-interest vehicle has been adjusted for inflation to $55,000, up from $54,000.
Importance to charitable giving: Because clients age 70 ½ or older can direct IRA distributions to charity without including them in taxable income (a “Qualified Charitable Distribution”), these clients can reduce their AGI and, if applicable, satisfy all or part of their required minimum distributions (RMDs). A QCD to a qualified fund at the MCF (such as a designated or field-of-interest fund but not a donor-advised fund) remains one of the most tax-efficient ways to support charity. And, here’s the Pro Tip: QCDs to qualified endowment funds at qualified community foundations are also eligible for the 25% Illinois Gives Tax Credit. So, there’s a double benefit…avoiding income tax on the QCD, plus reducing the tax payer’s state income tax, dollar for dollar, up to 25% of the value of the QCD.
Non-itemizer charitable deductions
Beginning with tax year 2026, a single-filer taxpayer who does not itemize deductions will be allowed to deduct up to $1,000 in cash donations to qualified charities (excluding donor-advised funds and private foundations). Non-itemizing joint filers may deduct up to $2,000.
Importance to charitable giving: Despite the relative inflexibility of the new deduction (e.g., gifts of appreciated stock don’t count and neither do gifts to donor-advised funds), nevertheless, this provision for non-itemizers could help encourage people to begin their charitable giving journey, especially in the case of young professionals. To that end, you might consider mentioning this new deduction to your high income-earner clients who have adult children. The Morton Community Foundation can help by offering non-donor-advised fund options to receive the $1000 or $2000 gifts as well as offer opportunities for family learning and hands-on involvement.
As 2026 gets into full swing, please reach out to the MCF team! We are honored to be your first call on all matters related to charitable giving. Thank you for the opportunity to help you serve your clients!
Contact us at: email: info@cfmorton.org • phone: 309-291-0434
Keep going: Why donor-advised funds are still essential
For many CPAs, estate planning attorneys, and financial advisors, the end of 2025 brought a whirlwind of charitable planning activity among high-earner clients. That’s because many taxpayers wanted to maximize the tax benefits of their charitable donations before the 0.5% “floor” and 35% “cap” on charitable deductions kicked in on January 1, 2026 under new tax laws. Donor-advised funds in particular played a big role in many late-2025 planning strategies because affected taxpayers could transfer assets to a donor-advised fund in 2025, achieve optimal tax results, and then thoughtfully recommend grants to favorite charities from the donor-advised fund in 2026 and beyond.
So what now? Should you still recommend that your clients establish and use donor-advised funds at MCF to organize their charitable giving?
Absolutely yes! Donor-advised funds remain a highly relevant and strategic tool for your clients. The IRS’s new deductibility limits may reduce the marginal tax benefit of giving for some of your clients, but nothing has changed about the donor-advised fund’s broader planning advantages for all of your charitable clients. Here’s why:
Fundamentally, regardless of tax benefits, your clients’ charitable intent is driven by values, legacy, and a desire for community impact. (No one gives away a dollar to save 35 cents!) That’s why you want to offer your clients the most effective charitable planning vehicles available to achieve charitable goals. A donor-advised fund at the Morton Community Foundation often plays a crucial role in a client’s overall philanthropy structure. Here’s why:
A donor-advised fund still allows clients to separate the timing of their charitable deduction from the timing of their actual grants to favorite charities, thereby preserving flexibility in years when income is unusually high or coming in handy when planning around liquidity events, even if the deduction is partially constrained under new laws.
Morton Community Foundation donor-advised funds, in particular, provide benefits that extend well beyond the tax code. That’s because of our team’s local expertise, deep knowledge of regional nonprofits, and ability to help your clients align their giving with real community needs.
When you work with MCF, you can confidently recommend a donor-advised fund because you know the client will receive administrative simplicity, top-notch service, and plenty of opportunities for deep community connections and multigenerational philanthropy.
In short, donor-advised funds at the Morton Community Foundation support your clients’ holistic wealth and legacy planning goals. MCF makes it easy for you, as the advisor, to integrate a donor-advised fund into a client’s estate plan, use a donor-advised fund to smooth charitable giving over time as a client’s income ebbs and flows, and lean on the donor-advised fund as a platform for strategic philanthropy that can evolve alongside a client’s unique life and financial circumstances.
Contact us at: email: info@cfmorton.org • phone: 309-291-0434
Case study: A QCD conversion in action
If you know the basics of Qualified Charitable Distributions (QCDs) but have a hard time envisioning exactly what to say and do when they come up in a client conversation, you are not alone! Whether you are an attorney, CPA, or financial advisor, at some point you will find yourself in the middle of a QCD conversation. Here’s a case study to help you be prepared.
Robert, a 68-year-old widower and longtime client of your practice, scheduled a meeting early in the year to discuss his charitable giving plans. In the email Robert sent to set up the meeting, he mentioned that he was now taking required minimum distributions from his IRA and his taxable income was higher than he expected or needed.
As you reviewed Robert’s file prior to the meeting, you were reminded that Robert had established a donor-advised fund at the Morton Community Foundation several years ago. You recall from prior conversations that Robert not only has enjoyed using the donor-advised fund to organize his charitable giving to dozens of favorite charities, but he’s also appreciated the many opportunities to tap into MCF’s events and educational opportunities.
Robert arrived at your office, and after catching up on each other’s lives lately, Robert said, “I’ve read about this thing called a Qualified Charitable Distribution. If I’m going to give to charity anyway, I want to understand whether doing a QCD in 2026 makes sense, especially if I want the gift to go through MCF where I already do all of my giving.”
You nod and explain that a QCD does indeed allow individuals like him who are age 70 ½ or older to transfer funds directly from an IRA to a qualified charity without including that amount in taxable income. You mention that this can be especially powerful after age 73, when required minimum distributions begin, because the QCD can satisfy all or part of the RMD while keeping adjusted gross income lower. “This can help address Medicare premiums, taxation of Social Security, and overall tax efficiency,” you continue. “With the annual QCD limit increasing through inflation adjustments to $111,000 in 2026, it’s a timely strategy to consider.”
Robert was glad to hear all of this. Then he asked, “I already have a donor-advised fund at the Morton Community Foundation. Can I simply direct my QCD straight into that fund?” You are prepared for this question! It is a common point of confusion. “That’s a great question, and you’re not alone in asking it,” you reply. “Under current IRS rules, unfortunately, QCDs can’t be made to donor-advised funds, even if they’re housed at MCF.”
Seeing his puzzled expression, you continue with a broader explanation. “QCDs are limited to certain types of charitable recipients,” you say. “They can go directly to public charities that are ‘operating’ nonprofits, and in limited cases to certain split-interest arrangements like a charitable gift annuity or a charitable remainder trust, subject to specific rules. Donor-advised funds are excluded, evidently because the IRS does not want the money to flow into account where the taxpayer retains advisory privileges. Donor-advised funds are of course entirely dedicated to charity, so the rule does not make a lot of sense. Yet here we are.”
Robert frowned slightly. “That feels frustrating,” he said. “I love the donor-advised fund because it gives me flexibility and lets me support multiple causes over time.” You acknowledged his concern. “I understand. The good news, though,” you say, “is that the Morton Community Foundation offers other types of funds that do qualify for QCDs and can still accomplish many of the same goals.”
You go on to explain that instead of directing the QCD to his donor-advised fund, Robert could direct the QCD to a designated fund at MCF that supports specific charities he already knows he wants to help, or to a field-of-interest fund focused on causes he cares about deeply, such as education or the arts, or to an unrestricted fund to support the community as a whole. “Those types of funds are fully managed by the Morton Community Foundation, without your advisory role after setup,” you say, “which makes them eligible recipients of a QCD while still aligning with your charitable intentions.”
Robert paused, considering the options. “I don’t want to make the wrong choice,” he said. “I also want to be sure the fund is set up properly and really reflects what I care about.” You agree that is exactly the point where collaboration matters most. “This is where I’d recommend looping in MCF,” you say. “They can help us think through which type of fund fits best, provide a fund agreement document, and enable me to fulfill my professional duty to ensure that the structure complies with QCD rules.”
You go on to suggest a joint meeting with a Morton Community Foundation representative. “The Morton Community Foundation knows the nuances of the fund options and the local charitable landscape,” you explain. “That’s a great match for the legal and tax obligations on my side of the transaction. Together we can help ensure that your QCD in 2026 is clean, compliant, and aligned with your values.” Robert smiled, clearly relieved. “That makes sense,” he said. “I don’t want this to be just about taxes. I want it to be meaningful.”
By the end of the meeting, you and Robert have agreed on next steps: you said you would review Robert’s IRA custodian requirements for executing a QCD, and MCF will set up a fund to receive the distribution. The plan will allow Robert to use his required minimum distribution to support the community he loves, reduce his taxable income, and create a charitable structure he feels confident about.
As Robert leaves your office, you can tell that he feels reassured that he didn’t have to navigate the rules alone. The conversation had clarified not only why a QCD in 2026 made sense for him financially, but also why working collaboratively with you and the Morton Community Foundation was essential. Together, you and MCF can turn a confusing tax rule into a thoughtful charitable strategy that supports both Robert’s personal financial goals and the broader community he intends to impact.
If Robert’s situation sounds familiar, or if you anticipate any type of charitable giving conversation with a client, the Morton Community Foundation is here for you! We are always happy to collaborate as you explore solutions to achieve your clients’ charitable goals. In nearly every situation, MCF can help. At the very least, we will point you in the right direction. Thank you for the opportunity to work together!
Pro Tip
QCDs can additionally benefit clients who have an Illinois State Income Tax liability. A QCD that is directed to a qualified endowment fund (we’re happy to help identify those) at a qualified community foundation (which the MCF is), will be eligible to apply for a 25% Illinois Gives Tax Credit. So, they not only avoid Federal income tax on the RMD, but they also receive the IL state income tax credit.
As you talk with clients over the coming weeks, keep in mind that tax laws are always subject to change–and sometimes for the better. Case in point related to Robert’s situation? A small, bipartisan tax law change has been proposed that would allow Qualified Charitable Distributions into donor-advised funds. Fingers crossed!
