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Charitable Gift Annuities
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You’re considering a lifetime gift in partnership with the Associate Alumnae of Douglass College > Your planning objective is increased income > Your investment preference is the stability of fixed income payments
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 Of all the gifts that pay you back, the gift annuity may be the simplest and most affordable. Here are some of the features that make the gift annuity our most popular life-income gift:
- You contribute your gift to the Rutgers University Foundation, as the agent for the Associate Alumnae of Douglass College, and the Foundation agrees to return fixed payments to you and/or another beneficiary for life. You will know what your fixed quarterly payments will be at the time you make your gift.
- A charitable gift annuity is easy to create. The gift agreement is a simple contract between the Rutgers University Foundation and you. Your payments become one of their general obligations, backed by all of their assets, not just the principal of your gift. The Foundation commits to making your payments.
- Gift annuities generally have a slightly higher payment rate than other life-income gifts.
- A charitable gift annuity may be funded with a gift of $5,000 or more. Gift annuities bring the benefits of a life-income gift into reach for many donors.
- You will receive a charitable income tax deduction when you create a gift annuity, based on the fair market value of the assets you contributed minus the present value of the life-income interest you retained.
- If you fund your charitable gift annuity with appreciated securities, no upfront capital gains tax is payable. You can contribute appreciated but low-yielding assets and put the entire amount of your gift to work for you. Only a portion of your capital gain will be reportable, and the tax will be spread out over your annuity payments.
- Another tax benefit of a gift annuity is the treatment of your payments: part of each will be treated as the tax-free return of your principal. This increases the effective yield of a gift annuity and is not available on other types of life-income gifts.
(The IRS provides that the capital gain and tax-free-income benefits are in effect during your life expectancy – if you live longer, the entire annuity payment will be taxed to you as ordinary income.)
- Your gift annuity can make payments to a maximum of two people.
- After the death of the last annuitant, the balance remaining in your gift annuity will be available to the Associate Alumnae of Douglass College for the Douglass Fund for the use you designated when you created your gift annuity.
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Example
You hold a stock portfolio that has appreciated well but only pays you and your husband 2 to 3 percent income per year. You are now 68, your husband is 70, and you are concerned that if you sell some of the stock to reinvest in bonds, capital gains taxes will cut heavily into the proceeds. You want to make a gift of $50,000 to Douglass College, but you and your husband need the income that your portfolio provides you.
You are looking for a gift plan that will continue this income, and, if possible, increase it.
You make a gift of stock that has more than doubled in value since you and your husband bought it. Your gift annuity will pay you and your husband a 6.5 percent income rate for an annual payment of $3,250, a significant improvement over the $1,250 the stock has been yielding.
Here’s a summary of the income and tax benefits from your gift annuity:
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Donors
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Wife and Husband, 68 and 70
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Click here
to calculate
the benefits
a gift annuity
would give
you.
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Amount contributed
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$50,000, stock
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Cost basis
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$20,000
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Current dividend income
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$1,250
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Gift annuity rate
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6.5%
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Annual payment
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$3,250 (fixed)
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Charitable deduction
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$7,027
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Increased annual income
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$2,000 ($3,250 annuity vs. $1,250 dividend)
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Note 1: This calculation is based on a factor that changes monthly. For the most current figures, contact us or go the Gift Calculator to see the benefits this gift would provide you today.
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Note 2: The Charitable Gift Annuity is not the only gift plan that pays you lifetime income. Compare its benefits with those of the annuity trust and the unitrust.
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How Do You Create a Gift Annuity?
Consult with an attorney specializing in the area of charitable gifts and estate planning. The Associate Alumnae of Douglass College Office of Gift Planning will provide a draft of the gift annuity agreement for review by you and your attorney, and will help you transfer cash or securities when you make your gift.
Email us, complete the personal illustration form, or call us at 732-932-2880 so that we can assist you through the process.
Associate Alumnae of Douglass College
Office of Gift Planning
181 Ryders Lane
New Brunswick, NJ 08901-8557
732-932-2880 | 732-932-2883 (fax)
E-mail: chamlin@winants.rutgers.edu
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