Charitable Gift Annuities
With a simple contractual agreement, a donor can establish an educational endowment fund benefiting a particular area of interest and receive a guaranteed lifetime income. With a gift, a donor receives guaranteed quarterly income payments for the rest of his or her life. Annuity rates can be offered for one or two people and range from 2% to 9%, depending on the age and number of income recipients. Gifts of cash, securities, real estate or other appreciated property can be used to fund a gift annuity. There are no start-up fees, the donor qualifies for a substantial charitable tax deduction and capital gains taxes can be reduced and spread over a number of years.
- EXAMPLE: Paul is a 76-year-old graduate of the University of Maine. He owns some highly appreciated but low-yielding stock. He can increase his income from the stock and benefit The University of Maine at the same time. In exchange for $20,000 worth of stock, the University of Maine Foundation could guarantee him a 6% fixed annuity on his gift — $1,200 per year for the rest of his life. In addition, he could claim a $8,855 income tax charitable deduction and spread capital gains tax over a number of years. He can sign a fund description detailing how he would like the income from the remaining principal from his gift to be used to benefit University of Maine students after his death.
Deferred Gift Annuities
By establishing a deferred gift annuity now and directing the quarterly payments to begin after one’s 65th birthday, a donor can enhance retirement income substantially and receive a larger charitable deduction.
- EXAMPLE: Maureen is a 55-year-old graduate of the University of Maine. She wants to supplement her retirement income, to claim an income tax charitable tax deduction now while she’s better able to use it and to help University of Maine students. If she puts $20,000 into a deferred gift annuity now, her current income tax deduction would be $5,820. When she is 65, the annuity will begin paying her $1,280 each year for life – a return of 6.4%. After her death, the income from the remaining principal will be used to help the students Maureen had hoped to assist.
The University of Maine Foundation has professional giving officers ready to work with you and your advisors. We may be reached Monday-Friday between the hours of 8 am and 5 pm by calling 1.800.982.8503 or via email at firstname.lastname@example.org.
The American Council on Gift Annuities (ACGA) is a qualified nonprofit organization formed in 1927 as the Committee on Gift Annuities for the purpose of providing educational and other services to American charities regarding gift annuities and other forms of planned gifts.