Charitable Gift Annuity: Is it right for me?

A planned gift that is gaining in popularity is the Charitable Gift Annuity.  Why?  Well, because it is a gift that is simple to make (in comparison to a Charitable Remainder Trust where legal and administrative services are needed) and it is a gift that provides the annuitant(s) (either an individual or couple) lifetime income while also benefiting the donors favorite charity. 

Characteristics of Charitable Gift Annuities

  • Donor(s) are charitably inclined and typically 65 years + in age (though younger donors may be interested in a deferred Charitable Gift Annuity)
  • A simple contract is made between an individual or couple and a charitable institution (charitable gift annuities typically can only benefit a single charity in comparison to a Charitable Remainder Trust which can benefit multiple charities -- the exception to this rule is when you find a community foundation that allows you to make a charitable gift annuity with them and designate several charities to receive the residuum of the gift)
  • Fixed income is provided for life to the donor(s) (it’s a gift that gives back)
  • Donor(s) will receive a charitable deduction for the year that the charitable gift annuity was made
  • A portion of payments are tax-free with an annuity rate that is most likely higher than the interest being paid on current fixed investments
  • A reduction can be seen in capital gains tax
  • Most commonly given is cash or appreciated securities between $10,000 to $100,000 (once gift sizes become more than $100,000, a Charitable Remainder Trust or Charitable Lead Trust may be more beneficial)

Below are two brief examples of Charitable Gift Annuities:

 

SINGLE LIFE CGA

 
Gift Amount: $25,000 (Cash)
Age: 65
Annuity Percentage: 4.7%
Quarterly Payment: $293.75 ($1,175.00 annually, of which $903.58 is tax free until 2032)

Charitable Gift Value:

$7,027.90

TWO LIFE CGA

 
Gift Amount: $50,000 (securities, $20,000 cost basis)
Ages: 70 & 75
Annuity Percentage: 4.8%
Quarterly Payment: $600.00 ($2,400.00 annually, of which $764.25 is tax-free until 2031)
Charitable Gift Value: $14,278.40

 

Interested in a charitable gift annuity? Contact the charities OR COMMUNITY FOUNDATION that mean most to you and see if they offer THEM.  

By: Kristen Schmidt, Marketing Coordinator of CTAC

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