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A charitable gift annuity is an extraordinary way to make a gift, increase your income and slice your tax bill -- all in one transaction! Our charitable gift annuity program was created as a service to our many friends who have expressed a desire to make a gift of significance, while still retaining income from the gift property during their lives.
The charitable gift annuity is the most popular life-income gift instrument among donors throughout the country.
JFCS' charitable gift annuity is a contract in which you exchange a minimum gift of $10,000 in cash or in securities for a guaranteed, fixed income each year for the rest of your life. Your gift annuity offers five distinct advantages:
- Income for Life -- at attractive
payout rates for one or two lives;
- Tax Deduction Savings -- a large
part of what you transfer is a deductible charitable gift;
- Tax-Free Income -- a significant part
of your annual payment is tax-free return of principle;
- Capital Gains Tax Saving -- when
you contribute appreciated securitites for a gift annuity, you minimize taxes
on your "paper profit";
- Personal Satisfaction -- from making a gift of lasting significance.
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Do you have certificates of deposit that are nearing maturity? Consider converting CD
funds to a gift annuity. Take the case of Mrs. K, age 75, who has $10,000 in a CD that
will mature next month. She may get approximately 2.5% interest on a new CD. But Mrs. K
had been considering how to remember JFCS and that leads her to a better plan: a charitable
gift annuity. For a $10,000 payment, Mrs. K will receive (1) annual income of $710 (7.1%) for
the rest of her life, much of which will be tax free, (2) a considerable income tax
charitable deduction, and (3) the immediate satisfaction of making a truly significant
gift.
Remember that the charitable gift annuity is an irrevocable gift commitment, but one
with excellent tax and financial benefits. |
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Gift annuity rates are determined by the age of the person or persons who receive the
income payments.
The following chart shows that rates are higher for older annuitants. We can also provide
you with payout rates for two-life arrangements.
| Examples of Single-Life Gift Annuity Rates |
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| Age of Donor |
Rate of Return |
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Age of Donor |
Rate of Return |
| 60 |
5.7% |
76 |
7.2% |
| 62 |
5.9% |
78 |
7.6% |
| 64 |
6.0% |
80 |
8.0% |
| 66 |
6.1% |
82 |
8.5% |
| 68 |
6.3% |
84 |
9.2% |
| 70 |
6.5% |
86 |
9.9% |
| 72 |
6.7% |
88 |
10.6% |
| 74 |
6.9% |
90 or over |
11.3% |
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Another option is a deferred gift annuity. A deferred payment gift annuity is simply a
contract in which you exchange cash or securities for a guaranteed, fixed income for life --
starting in some future year that you designate (for example, at the time you expect to retire).
A large part of what you transfer represents an important gift to our future, which translates
into a sizable charitable deduction. Deferring the start of your payments also increases the
amounts you will receive each year. |
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Here is a short true/false quiz to check your understanding
of how charitable gift annuities work:
| Answer: |
| 1. |
False. One of the compelling things about gift annuities is the steady payment amount. Year in and year out the amount is the same. |
| 2. |
False. The annuitant is the person or persons receiving income from the annuity. A donor may establish a gift annuity for another person (annuitant), such as a spouse or parent. |
| 3. |
True. Since part of the contribution to establish a gift annuity is considered to be a gift to the organization, the annuity amount is smaller than it would be if the entire contribution were used to purchase an annuity. |
| 4. |
True. Gift annuities are only available from charitable and educational institutions
that have been qualified by the IRS ?- and in our case by the State of California ?- to issue them. |
| 5. |
True. The percentage of payments that is tax-free varies depending on the type of asset used to obtain the annuity and the life expectancy of the annuitant(s). |
| 6. |
False. The opposite is true. The older the annuitant, the higher the rate is likely to be. |
| 7. |
True. The IRS has stipulated that a maximum of two persons can receive payments from a gift annuity. |
| 8. |
True. These arrangements are called "deferred payment gift annuities" and are popular among younger donors who want to combine charitable giving with a retirement supplement plan. They defer income until later and, in the meantime, the rate of payment increases due to the compounding value of the delay. |
| 9. |
False. The two-part name, "gift" and "annuity," point to the fact that only part of the contribution amount is a charitable gift; the other part is an investment in an annuity contract. Only the gift part produces an income tax charitable deduction. |
| 10. |
False. Gift annuities are quite safe because they are tied to the assets of the charity, not an income portfolio. The organization issuing the annuity must make the annuity payments no matter what happens to the economy.
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How did you do with the quiz? Would you like to know more?
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For more information or to get started with your own charitable gift annuity, please call or email:
Director, JFCS Permanent Endowment Fund
Jewish Family and Children's Services
2150 Post Street
San Francisco, CA 94115
Phone: (415) 449-1222
Email: ClaireA@jfcs.org. |
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