CHARITABLE GIFT ANNUITY
What Are They?
A Charitable Gift Annuity is a legal agreement between a donor and a charitable organization where the charity agrees to pay a guaranteed lifetime income to the donor in exchange for a charitable gift.
There are numerous financial benefits donors may realize that make this gift arrangement very popular with donors. However, any discussion of a Charitable Gift Annuity must emphasize the "gift" aspect of the arrangement.
What’s In It For The Donor?
One potential benefit is high current income. It is common for a donor to receive a lifetime income payment from a Charitable Gift Annuity that is greater than the income available from U.S. Treasury bonds, bank CDs or money market funds.
A second potential benefit is income tax savings. The value of the gift that will eventually benefit the charity produces a current income tax deduction for the donor. The tax savings has the effect of increasing the donor’s income. If the asset gifted has appreciated in value the donor may also reduce capital gains tax by spreading the tax over a period of years.
A third potential benefit is capital gains tax savings. If the asset given to the charity has appreciated in value the donor will avoid having to pay all of the capital gains tax in the year of the gift. Instead, the capital gains tax will be spread over a period of years.
What’s In It For The Charity?
Charitable Gift Annuities have been offered by charitable organizations for more than a century. They are well established, and are regarded by many organizations as an effective method of attracting more and larger financial contributions. Many leading educational, religious and environmental organizations offer CGAs as a convenient and effective way to allow donors to support the work of the organization.
Please contact the church office for further information.