A Charitable Gift Annuity is a contract between The Foundation and you. You irrevocably transfer cash or securities to our segregated fund in exchange for our promise to pay you a fixed amount each year for the rest of your life. The amount you receive is determined by the amount of your gift and your age at your nearest birthday at the time of your gift. The older you are when you make the gift, the higher the rate of return. These rates are set by the American Council on Gift Annuities. Once your annuity is established your income remains constant. It is not affected by adverse economic conditions. Annuity payments can be made quarterly, semi-annually or annually, whichever prefer. Payments can also be structured to pay over two lives.
You receive an immediate income tax deduction which may be taken on the year of the gift or in the following 5 years. Your also receive a large portion of income payments as tax-free income. By creating a Charitable Gift Annuity you transfer assets which are now yielding fully taxable income into a guaranteed life income which is partly tax-free and is fixed by your age at the time of the gift.
An example: Lawrence and Valerie make a gift of $20,000 to The Foundation through a Charitable Gift Annuity. Their rate of return is 7.8% for both of their lives. Their annual income is $1,560 of which $1,062 is tax-free and $497 is ordinary income. They have a charitable deduction of $6,820 that they can use up to 50% of their adjusted gross income this year and the remaining amount over the next 5 years as needed.
The annuity at the end of your life becomes an endowment fund to benefit the specific beneficiary within the Diocese of Ogdensburg you designated at the time you established the Charitable Gift Annuity. Because the annuity is structured to ultimately go to charity, you will receive an income tax deduction in the year it is established. Depending on your age(s), an annuity may outperform current rates on CD’s and savings accounts. Also, because part of each payment represents a tax-free return of principal, the effective return may be greater than a similar fully-taxable investment.
Annuities can be an ideal planning vehicle for retirement income. The major advantages of a Charitable Gift Annuity are:
- Fixed income for life
- Tax deduction savings
- Majority of income is tax-free
- Capital gains tax savings
- Personal satisfaction from making a gift of lasting significance