How to Use CDs (Certificate of Deposit) as a Charitable Gift (2024)

With higher interest rates, it’s a great time to use certificates of deposit (CD) in your charitable giving strategy. There are a few ways to give a CD to the nonprofit organization of your choice and all it takes is a few more steps than if you were to open a CD for yourself.

Ways to Contribute CD Funds to Charity

Ways to Contribute CD Funds to Charity

Naming an Organization as CD Beneficiary

Designating an organization as the beneficiary of your CD is a straightforward way to support its work. You can gift it to an organization Payable on Death (POD). You’ll need to designate one or more charities as the beneficiaries of the CD funds once you, the account owner, pass away.

However, until you are deceased, the beneficiaries will have no rights to the funds, and you will remain in control and are free to use the money, reinvest it in another CD, change the beneficiary, or close the account.

Setting up an organization as a beneficiary streamlines the administration process as the executor or administrator of your estate will not have to take action to ensure that your account transfers to the designated beneficiaries.

Donating CD Funds, the Old-Fashioned Way

Lastly, you’ve found a rate with terms that will help your principal grow into the amount you’d like to donate to your charity. Locking in a rate and term and waiting to pull CD funds out once it has matured and reached your target amount is a simple way to donate more to the causes you care about most.

Donating Interest Earned on the CD

However, if you only want to donate the interest earned on the CD and retain the CD principal, you can set up monthly, quarterly, or at-maturity interest payments to your favorite nonprofit by check or ACH depending on the terms of your CD. This will be set up to go directly to the charity of your choice. Please note that if you withdraw the interest on a monthly or quarterly basis, the CD will not earn the full annual percentage yield (APY).

Leveraging CDs to Grow Your Donations

Whichever way you choose to give your CD as a charitable donation, you can know you are funding a great cause, and your contribution may be tax deductible. Consult your tax adviser as part of your due diligence, to learn about potential tax benefits to your donation.

FAQs

Is my contribution tax-deductible when donating a CD to charity?

Consult your tax adviser for information on potential tax benefits associated with your charitable donation.

How does naming a nonprofit as the CD beneficiary streamline administration?

It simplifies the transfer process upon your passing, eliminating the need for the executor to take action.

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