Planned Gifts: The Gift Annuity
Income for Life for You . . . Benefit for Future Generations
A charitable gift annuity is an extraordinary way to make a gift, increase your income, and slice your tax bill—all in one transaction.
A charitable gift annuity is a contract in which you exchange a gift of cash, appreciated securities, or grain for a fixed income each year for the rest of your life (or for the lives of two people). Your gift annuity offers five distinct advantages:
- Income for Life—at attractive payout rates for one or two lives
- Tax Deduction Savings—partial charitable deduction
- Tax-Free Payout—a portion of your annual payment is tax-free return of principal
- Capital Gains Tax Savings—when you contribute appreciated securities for a gift annuity, you avoid capital gains taxes on the increased value since original purchase
- Personal Satisfaction—from making a gift of lasting significance
- Full Market Value goes to the charity
You Can Choose . . .
How frequently payments will be made – monthly, quarterly, annually; one life or two-life annuities; and type of asset to fund your gift. Cash gifts allow maximum tax-free payments. Gifts of appreciated securities allow you to minimize capital gains taxes.
Gifts of Securities Save Twice
A gift annuity funded with appreciated securities may hold special advantages. If you gave $10,000 worth of stock in which you have a $3,500 long-term capital gain, you can avoid some tax that you would owe were you to sell the stock. Suppose your charitable deduction was 40 percent of the $10,000 you gave. You would escape tax on 40 percent of your $3,500 gain. The remaining capital gain will be reflected through your annuity payments over your life expectancy.
How Much Income Will I Receive?
Gift annuity rates are determined by the age of the person or persons who receive the income payments. Contact the Office of Communications and Development at 641-236-2589 for an example of how a gift annuity will work in your situation, including the annuity rate you would receive.