Gift Annuity Overview
A charitable gift annuity (CGA) is a simple agreement between an individual and a non-profit organization. In exchange for a gift of assets (i.e, cash, stock, bonds, real estate, etc.) the donor(s) receive a lifetime income. At death, the non-profit organization retains the use of any unused principal and interest.
The CGA has been offered by non-profit organizations for over a century. It has been a tremendous vehicle to create current cash or deferred dollars, depending on the structure and funding of the annuity.
The simplicity of this type of gift makes it attractive to both parties. However, certain requirements such as administration, tax reporting, monitoring, and effective marketing can be complicated. CTAC has simplified this process and provides a turnkey system for organizations to offer a successful gift annuity program.
CTAC Program Initiation
- Administration set-up and structure
- Presentation and Procedure Manual
- Assistance with proper registration of CGA program
Administration & Monitoring
- Implementation assistance of CGA Agreement with the donor
- Tax deduction calculation for donors and their advisors
- Prepare and file IRS 8282 (when required)
- Prepare and file IRS Forms 1086 and 1099-R
- Monitor donor CGA compliance with the organization’s CGA policy
- Produce CGA charitable contribution receipt letters and process charitable remainder distributions
- Monitor and report CGA income and disbursement activity, including check distribution if desired
- Assist in development of marketing pieces to encourage participation
- Maintain individuals donor sub-account, including donor CGA agreement information, CGA investments, donor contributions and CGA distribution to annuitants and charitable organizations
Role of CTAC
CTAC is responsible for assistance in marketing materials, implementation, tax reporting, compliance, monitoring and administration. These services will all be integrated with the non-profit organization’s selection of the money manager for their separate gift annuity managed account.
Role of Advisor
The non-profit organization will choose the money manager. The selected money manager will invest the money with the organization’s objectives and the assumptions under the CGA table. This will help to enhance the ultimate amount of the remainder to the non-profit organization.
Role of the Non-profit Organization
The role of the non-profit organization is to appoint an individual responsible for marketing the CGA program. CTAC will work closely with this person to ensure successful results. The non-profit organization should also recruit volunteers to assist in the marketing. CTAC will provide training material for these volunteers.