Office of Development
Planned Giving
Charitable Gift Annuity Generates Income for Donors
Many of our friends who have been discouraged, or even hurt, by low earnings on their cash investments are discovering that they can help University of St. Francis and help themselves by the same means - a charitable gift annuity.
How a Gift Annuity Works
A gift annuity is a simple contract between you and University of St. Francis. In exchange for your irrevocable gift of cash or securities, University of St. Francis invests the assets and agrees to pay you fixed payments for life (and, if desired, for another beneficiary's lifetime). Upon the death of the last beneficiary, the funds are available for the university's use.
The transaction is partly a charitable gift and partly a purchase of the income interest. The annuity rate is the dollar amount returned to you annually as a percentage of the value of your gift, and these rates are based on the life expectancies of the recipients. Often the rates surpass any return possible through other investments, as shown in the chart below.
Benefits
- You have the benefit of lifetime payments for yourself and possibly another person, but there are numerous tax advantages, as well. The portion of the transaction that is considered a gift qualifies as a charitable deduction.
- Part of the annual payments is considered a tax-free return of capital, excluding it from gross income until you reach your life expectancy.
- If you contribute appreciated securities, you will need to pay some capital gains taxes for the "sale" portion of the transaction, payable over your life expectancy - not in one year.
- If you and/or your spouse are the only beneficiaries, the value of the annuity may be taxed in your estate (it may qualify as a marital deduction).
A charitable gift annuity pays a donor a fixed rate for life. The following Adobe PDF files are examples of annuity rates for 2006 - 2007. If you do not have Adobe Software, please click here to download.
Single Life Annuity Rates for 2006 - 2007
Two Lives (Joint & Survivor) Annuity Rates for 2006 - 2007