Charitable Gift Annuities
A charitable gift annuity is a simple contract established between a donor and the Community Foundation by which a portion of a gift of cash or marketable securities transferred to the Community Foundation establishes an endowed fund to benefit a charity of the donor's choice. The remainder is returned to a designated recipient as scheduled income payments.
Charitable gift annuities are easy to establish, require no trust administration, incur no setup costs to the donor and provide partial a charitable income tax deduction for the donor. The donor escapes worries about managing the donated asset and keeping its value up with inflation.
Why the Community Foundation?
By establishing a charitable gift annuity, your donation will assist the charity of your choice in achieving its mission. You also may choose to have your gift endow a specific cause. Our flexibility ensures you the joy of giving and that the spirit of your funds will be honored and preserved in perpetuity.
Charitable gift annuities that benefit the Community Foundation are used to initiate programs, coordinate resources and support organizations that enhance education, community betterment, arts and culture, health and human services.
Benefits of Charitable Gift Annuities
- Lifetime payments: Reliable and consistent payments you cannot outlive
- Family comfort: No probate or estate taxes on the donated assets
- Accomplish your philanthropic goals: Support your favorite charities
Payments can be made to you alone, for the benefit of someone else or you and another person. Different tax rules apply to each situation and should be discussed with your professional advisor.
You may choose from monthly, quarterly, semi-annual or annual payments. Payments can be deposited directly into your bank account or you can receive a check.
The Community Foundation uses the American Council of Gift Annuity rates for the current amount payable with a charitable gift annuity. Contact the Community Foundation at 515-883-2626 for the rates payable for your age.
You, as the donor, are entitled to a charitable income tax deduction for a portion of the value of the donated asset. Your income tax deduction is equal to the fair market value of the donated property minus the value of the income payments.
If you donate an asset other than cash, you may have capital gains built up inside the value of the asset. For example, if you were to sell appreciated stock outright, normally you would incur a capital gains tax on the value of the stock over your cost basis. However, when you donate the same asset to the Community Foundation, you will receive a charitable deduction and in most cases bypass up front capital gains taxes.
With a charitable gift annuity, the asset is no longer in your estate for estate tax calculations. Therefore, you are reducing the future size of your taxable estate and hence reducing your estate's tax liability.
Since you will not own the donated asset upon your death, the asset will not be subject to the probate process nor will it be subject to probate fees.
Establishing a charitable gift annuity is simple. No trust instrument is necessary to establish a charitable gift annuity. Simply sign a contract stating what asset you wish to donate, the charity you wish to support and the payment amount you will receive for your lifetime. The charity you select must hold a fund at the Community Foundation.
If you are at least 62 years old and have a minimum of $15,000 in cash or marketable securities you'd like to give, talk with us about establishing a charitable gift annuity.