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Charitable Gift Annuities are often referred to as the “gift that gives twice” or the “gift that gives back” - because it does! First, a Charitable Gift Annuity (CGA) gives you a guaranteed income stream for life and second, a gift is made to charity at your death.
Here is an example...
Ruth is 70 years old. As part of her assets she has $10,000 in a Certificate of Deposit (CDs) that is paying 5.0% a year. Her CD is coming due next month and she is evaluating her options for investing the money. She would like to increase her income but doesn’t want to take risk with the money. Also, Ruth has been thinking about her estate plan and making a gift to her church through her will.
After reviewing her options with Foundation and her advisors, Ruth decides to fund a Charitable Gift Annuity with the $10,000 when it comes due. Based on her age, Ruth qualifies for a 7.2% payout. She will receive $720 per year from the annuity until her death, an improvement over what her CD is currently paying. Part of the $720 annual payment is tax free and part taxed at ordinary income tax rates. Ruth will also receive an income tax charitable deduction in the current year of approximately $3,500.00. At her death the remainder of the annuity proceeds pay into her church’s endowment fund, helping the church to continue its ministry.
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