A gift-annuity contract becomes a legal financial obligation of your organization and is backed up by all of the assets of your organization. Should the donor outlive their CGA contract values, your organization will use it’s other assets to continue making annuity payments to the donor for their lifetime.

The organization assumes that part of the payments you receive will come from the investment earnings on the funds you contribute to us which we hold in a separate account and invest.The other portion paid to you will come from the principal of what you originally contributed to fund your Charitable Gift Annuity (CGA).The payout rate to you assumes that [organization] will have about 50% of your original contribution left at your passing.

Both have distinct advantages. A gift of cash will produce a larger tax-free portion of the annuity. A gift of stock can increase the donor’s income because of reduced capital gains cost. Both assets produce an equal annuity rate and charitable income-tax deduction.

• A CGA can be set up for only one or two beneficiaries. This is typically a husband and wife, but it could be two siblings or two friends, etc. Beneficiaries should be at least 60 at the time of the gift (check with your organization as exact ages can vary based on your policies) to secure the most favorable gift annuity rates. For more flexible beneficiary choices, donors could consider a Charitable Remainder Annuity Trust (CRAT) or a Charitable Reminder Unitrust (CRUT).
• If the income beneficiary is not a spouse, there will be gift taxes to be considered. Payments to a non-spouse can impact the taxation of the donor’s gift. Before setting up a gift to benefit someone other than themselves or their spouse, donors should be sure to consult with their tax advisors..

• A commercial annuity, typically sold by banks and life insurance companies, will provide the owner with fixed or variable income based on commercial rates of return. These plans establish their annuity payments based on the assumption that all assets in the plan will be used up by the end of the income beneficiaries’ lives.
• A CGA is part guaranteed annuity and part charitable contribution. The donor receives a partial income tax deduction based on the assumed value of the portion of the gift your organization will ultimately receive. A gift annuity establishes the amount of the donor’s payments on the assumption that there will be something left for the charity at the end of the contract. Often annuity rates for gift annuities cannot compete with the annuity rates of a commercial annuity because of the charitable component in the contracts. But there are fewer tax benefits with a commercial annuity.

Yes, donors can make a gift now for an annuity contract that will defer their payments to a future date that they decide, typically sometime in the donors’ retirement years when they will need the income. In this sense, a deferred-payment gift annuity can serve as a type of tax-deferred savings plan that will provide the donor with guaranteed payments in the future. The donor will still enjoy a partial charitable tax deduction in the year the gift annuity is funded.

Whenever there is a need for fixed, secure retirement income while also providing a future gift for your organization, an immediate-payment gift annuity should be considered. Most donors setting up gift annuities do so in order to supplement their retirement income. They typically find that in today’s interest-rate environment, they cannot replace the fixed income they were receiving from maturing bonds and CDs. A gift annuity can provide increased cash flow and tax savings now and in the future.

• No. The Pension Protection Act of 2006 specifically carved out tax free distributions from an IRA to a CGA. A donor may still use a distribution from an IRA to fund a CGA, but the IRA funds must first be received by the donor (i.e. constructive receipt and liable for income taxes) and then sent to a charity by the donor to fund a CGA. With the normal tax-deductible benefits afforded to a donor by a CGA gift, the tax liability of the IRA distribution may be partially offset.
• Technically, “The exclusion from income applies only if a contribution deduction for the entire distribution otherwise would be allowable (under present law), determined without regard to the generally applicable percentage limitations.”* Thus, split interest gifts of any type do not qualify since their funding has deduction percentage rules.

* From the PPA 2006 language

In most cases the charitable tax deduction will be based on the appraised value of the property.   But the annuity payments themselves will be determined according to however the CGA contract is written. One approach is to begin making annuity payments based on the appraised value.  Then, once the property is sold, there may be an adjustment made to the annuity payments if the property sold for less than appraised value.  If the property sells for more than appraised value, it simply increases the residuum that the charity will receive upon the death of the donor, but it does not change the annuity payment amount.

Many charities do not provide for gifts of real estate in their Gift Acceptance Policies due to the risks involved.  In that case the charity should seek outside assistance for funding a CGA with real estate.   Here is a link to an organization which is well equipped to handle the real estate and issuance of the CGA on an outsourced basis with 100% of the residual value at the death of the donor being paid to your organization:  www.nationalgiftannuity.org

While the annuity rates we use will change from time to time as set by the American Council on Gift Annuities (ACGA), the rate that we will pay you on a given Charitable Gift Annuity contact will never change after the contract is issued.The dollar amount of your payments will be fixed for your lifetime, regardless of market conditions.

We subscribe to the rates recommended by the American Council on Gift Annuities (ACGA), an independent body who studies mortality rates, the economy and interest rates and publishes a rate schedule for use by all nonprofits who issue Gift Annuities. 97% of all nonprofits abide by the ACGA rate schedule.

IMPORTANT NOTE: State your policies if you do not subscribe to the rates recommended by ACGA.

Yes.Statistically two lives will require that payments be made for a longer period than one life.So, the rate of payment takes that into account and is less than the rate for a single life, even if the annuitants are the same age.

Yes.You will be issued a Form 1099R at the end of the year which will indicate what portion of your CGA payments are taxed for that year as Ordinary Income, Capital Gain and Tax-Free Return of Capital.The results will depend on the nature of your original contribution to fund the CGA, i.e., cash or appreciated securities.

You can choose to receive payments quarterly or annually around a special day or even monthly.

IMPORTANT NOTE: State your policy if different.

You can choose to receive payments by check or by electronic fund transfer (EFT) into your financial institution.

IMPORTANT NOTE: State your policy if different. For many US Mail has become inefficient, too many checks lost in the mail, etc.