Gifts That Provide Income to You and Others
There are many ways to make charitable gifts that feature income for you and/or others for a period of time. There are also ways to provide income for charitable use today, with assets passing to your loved ones while reducing or eliminating probate, estate and gift taxes and other expenses.
- Charitable Gift Annuities that feature generous fixed payments for life are one of the most popular ways to make a planned gift.
- Deferred and Flexible Deferred Gift Annuities that feature larger fixed payments for life, while letting you decide when the payments will start in the future.
- Charitable Remainder Trusts that feature a choice of fixed income or income that can fluctuate with investment returns.
- Gifts of Remainder Interests in a home that feature tax and other benefits, while allowing you to enjoy the use of the property for the remainder of your lifetime and/or that of your spouse or other loved one.
- Charitable Lead Trusts that provide temporary income for charitable purposes with an eventual tax-favored inheritance for your heirs.
Charitable gift annuities are an extremely flexible way to make a gift while providing fixed payments for life—payments you can NEVER outlive. They are designed to provide steady payments for 1 or 2 people (usually a donor or donor and spouse). They are simple to create and can be funded with gifts of $10,000 or more. Additional, subsequent charitable gift annuities can be established with a gift of $5,000 or more. You must be 65 years of age or older to begin receiving payments.
Here’s how a charitable gift annuity works with the Center for Global Development:
- You irrevocably transfer cash or other assets to CGD. This involves completion of a simple agreement and can normally be handled easily by mail.
- You’ll receive generous fixed payments regularly (most people choose quarterly payments) that will never vary in amount. The amount is based on the recipient’s age when the gift is made.
- You will be entitled to an immediate income tax charitable deduction. In addition, part of each payment is tax-free for your life expectancy.
- If desired, you can also choose to name another person (typically a spouse, parent or sibling) to receive payments with you, instead of you, or following your lifetime for the remainder of his or her life.
- The assets used to fund your gift annuity will generally be removed from your estate for tax purposes.
- You make a significant charitable gift.
Many choose to fund a new gift annuity agreement each year. Since payment rates increase with age, each gift annuity generally brings larger annual payments.
When appreciated property such as stock, mutual funds, or other securities is given for a gift annuity, part of the capital gains tax that would normally be due on its sale can be avoided at the time of the gift. Only part of the gain will need to be reported over the annuitant’s life expectancy. The charitable deduction is normally based on the current value of the gift.
The use of appreciated, low-yielding assets to fund a gift annuity can thus be an excellent way to completely bypass capital gains tax at the time of your gift. Using such assets also allows you to enjoy a current charitable tax deduction and delay payment of capital gain taxes on a portion of each payment.
For any planned gift, please consult your own financial advisor. For more information concerning your estate planning and CGD or for a summary of plans that feature income for you and/or the Center for Global Development, please contact Sarah Marchal Murray, at 202-416-4025 or smmurray@cgdev.org.
