It’s an opportunity to give back while also ensuring you have the income you need.
Creating a charitable gift annuity can be easy. You donate cash or marketable securities to a foundation, a nonprofit or a charitable gift annuity program, and in exchange, the charity will promise to pay you, or a person of your designation, a fixed amount of income every year for the duration of your life. CGAs can be a way to fund charitable interests while also providing a steady stream of income.
The Benefits of Charitable Gift Annuities
Tax Deductions: Through CGAs, donors can benefit from tax advantages. A portion of their donation may be tax-deductible in the year they make the gift. Additionally, if they donate appreciated assets, they can avoid paying capital gains tax on those assets, allowing more of their money to go to the causes they support.
Guaranteed Income: One of the primary benefits of a CGA is the fixed payments received. These payments are based on age and the amount donated.
Charitable Impact: CGAs can inspire more people to consider philanthropy by combining charitable giving with financial security. Fixed payments can motivate individuals to contribute more than they might otherwise, as they see a direct benefit alongside their charitable impact.
Understanding CGA Payout Rates
While the specific payout rates can vary, it’s worth noting that they tend to be more favorable for older donors. Generally, the older they are when they establish a CGA, the higher the payout rate. Once the CGA is established, the payment amount remains fixed for the duration of the donor’s lifetime, providing financial stability.
Is a Charitable Gift Annuity Right for You?
If you’re considering a CGA, think about what causes you’re passionate about and how you’d like to support them. Whether it’s education, environment, housing, health care or the arts, foundations like the Arizona Community Foundation can help ensure your gift makes a meaningful difference.
Let’s take Emily Grand as an example. She is a retired professor who has always been passionate about education and supporting local charities. After learning about CGAs, she decided to establish one with the Arizona Community Foundation. She chooses to donate a certain amount of her savings, and this donation would provide her with a fixed annual income for the rest of her life. Emily’s CGA offers her an annual payment of approximately $5,500, providing her with a reliable source of income to cover living expenses and enjoy her retirement activities. This example illustrates how an individual can leverage a charitable gift annuity to achieve financial security while supporting a cause they care about.
A charitable gift annuity isn’t just a financial transaction; it’s a way to align your values with your financial goals. It’s an opportunity to give back while also ensuring you have the income you need.
If you’re intrigued by the idea of a charitable gift annuity, foundations play a crucial role in helping donors set them up. They can provide you with the information you need to make an informed decision and guide you through the process. Foundations typically handle the investment of the funds contributed to the CGA, making the process a lot easier for the donor. They use their expertise to ensure the funds are managed properly and they often have resources or partnerships with tax professionals who can help donors understand the tax implications of establishing a CGA. FBN
By Lisa Sahady
For more information on making an impact locally with a CGA, call one of our offices serving Northern Arizona: ACF of Yavapai County at 928-583-7815, ACF of Sedona at 928-399-7218, or ACF of Flagstaff at 928-526-1956.
Lisa Sahady is the regional director of the Arizona Community Foundation of Yavapai County.
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