The Charitable Gift Annuity
The Charitable Gift Annuity allows the donor to transfer
cash or securities to the College in exchange for a fixed dollar
return guaranteed annually for the donor's life and that of
a survivor beneficiary, if desired. A portion of the annual
income is tax-free. The principal is retained by the College
after the life of the donor(s). The donor receives a charitable
income-tax deduction for a portion of the gift in the year
the annuity is acquired. If appreciated property is used to
fund the annuity, only a part of the capital gain is recognized,
and the gain is taxed pro rata over the life expectancy of
the donor.
Click here to see current CGA rates
Gift Range: $10,000 and More.
Advantages
- Guaranteed amount of income for donor and beneficiary for
life
- Charitable tax deduction for portion of gift
- Portion of income is tax-free
- Partial capital-gain tax prorated over donor's lifetime
- Wooster receives principal after donor's lifetime
Gift Annuity Examples
The following are examples of gifts. The yield of the annuity
is based on the age(s) of the donor(s).
One-Life
Mrs. Kauke is 70 years old and looking forward to her class
reunion. She gave $10,000 in exchange for a single-life gift
annuity. The full amount of her gift is included in the class
fund and she now receives $670 (6.7 percent) annually for the remainder
of her life. A portion of her income is tax-free, and in the
year of her gift, she received a $3,977 charitable tax deduction.
Two-Life
Mr. Wooster is 75 and his wife is 74. Mr. Wooster wants to
contribute a gift that will continue to provide income. He
held XYZ stock worth $15,000 that he had originally purchased
for $5,000. The stock's dividend yield is 3 percent. Mr. and Mrs.
Wooster transferred the stock to the College in return for
a two-life annuity. They are receiving $975 (6.5 percent) annually.
They also received a charitable tax deduction of $5,376 and
avoided paying a considerable amount of capital-gain tax.
The Woosters made a very thoughtful gift and increased their
annual income.
The charitable deductions shown in the examples are based
on the federal interest rate at the time the illustrations
were calculated.
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