A Gift to Us That Returns the Favor to You

You've heard the old adage that it's better to give than to receive. But with a charitable gift annuity, you help yourself at the same time you are helping your favorite charitable organizations.

Add Up the Numbers

Most organizations use annuity rates recommended by the American Council on Gift Annuities. These rates are the same for men and women and are slightly lower for two annuitants of the same age.

Let's look at what these rates mean for a donor aged 75. Jane has long wanted to make a significant gift to your favorite charitable organizations, but she likes the security of receiving income payments from her assets, and she doesn't want to give that up.

After hearing about the benefits of charitable gift annuities though, Jane finds that she can make a charitable gift and receive a steady stream of payments. With a gift of $10,000 to your favorite charitable organizations, she sets up an annuity that pays her $710 annually in quarterly installments (7.1 percent of her $10,000 gift).

As a result of her generosity, Jane will also be able to claim a charitable deduction of $4,297 on her income tax return in the year she makes the gift.¹ At her 28 percent annual income tax rate, this saves her $1,203ómaking her out-of-pocket cost for the gift only $8,797. Taking into account her tax savings, with each annual annuity payment of $710, she is actually receiving 8.1 percent of her out-of-pocket cost.

Assuming she lives to age 87, her life expectancy, more than half of the annuity installments she receives will be nontaxable. To realize the same after-tax amount to spend or reinvest, an all-taxable return would have to be 10.1 percent on net cost for these years.

Please contact Mary Ludwig, Development Director at 712-732-5127, for more information.

¹This figure is calculated using quarterly payments and a 4.6 percent federal midterm rate, a figure used by the IRS in determining the future value of a gift.

The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional or investment professional.

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