How does a charitable gift annuity work?
In return for your contribution, and pursuant to a signed agreement, the community foundation agrees to make fixed payments for life to you or the annuitants that you designate.
Who may receive payments from the annuity?
Payments may be made to one or two annuitants who are at least 60 years old. Typically, donors name themselves as annuitants, but an annuity can also be established to benefit others, such as a parent, sibling or friend.
What will the amount of my payments be?
Payments will be determined at the time the annuity is established and will be based on the age(s) of the annuitant(s) at that time.
What is the minimum gift to establish a charitable gift annuity?
The minimum gift is $25,000.
At what age can I establish a deferred gift annuity?
A gift annuity may be established for an individual who is as young as 45. However, payments must be deferred until the annuitant(s) reaches age 60.
Is there a fee to establish the gift annuity?
Yes, there is a startup fee of $200 per contract.
How does a charitable gift annuity benefit Silicon Valley Community Foundation?
At the end of the annuitant’s life – or, with the two-life annuity, at the end of both lives – the remainder of the principal you have transferred will be used to support the work of the community foundation. You may designate a portion of the remainder to a specific nonprofit or give all or a portion of it to the community foundation’s Community Endowment fund to help further the work that it carries out in San Mateo and Santa Clara counties.
Can my charitable gift annuity benefit another organization?
Yes, the residuum of the charitable gift annuity that you establish can be used to support both SVCF and another charity of your choice. Sixty percent of the assets remaining in the contract after its termination can be designated as an outright gift to your favorite charity. The remaining 40 percent can be designated to SVCF’s community endowment fund to support the work the community foundation does in Santa Clara and San Mateo counties, or it can be used to establish a nonprofit endowment fund to benefit the charity of your choice, provided that the minimum amount to establish a fund is met.
Is my gift tax-deductible?
Yes. You may receive a charitable deduction in the year of the gift for the portion that is expected to remain for charity after your lifetime. In addition, a portion of the annuity payments may be tax-free, representing a return of the principal contributed.
Can I contribute securities for a charitable gift annuity?
Yes. In fact, contributing highly appreciated securities that you have held for more than 12 months offers additional tax savings. You may reduce the tax on the capital gain attributable to the charitable gift portion of the contribution. If you are an annuitant, the gain attributable to the annuity payments does not need to be recognized in the year the gift is made but can be reported ratably over life expectancy.
I don’t need additional income now, so is a charitable gift annuity wrong for me?
Not necessarily. You may want to consider a deferred annuity, with payments that begin in a future year. A charitable deduction may be received the year the gift is made, which may help offset current, high income.
Are there advantages for establishing a deferred annuity?
Yes. Since payments are deferred until age 60, the eventual payment rate will increase.
What payment rates can I expect?
Gift annuity rates are based on the age(s) of the payment beneficiaries at the time the annuity is established and are recommended by the American Council on Charitable Gift Annuities. Consider the current rates as of August 2013 for one immediate beneficiary as an example:
|Age of annuitant||60||65||70||75||80||85||90|
|Current rate for one annuitant||4.4%||4.7%||5.1%||5.8%||6.8%||7.8%||9.0%|
*Rates subject to change. Rates are valid through June 30, 2014.
Is there a way to calculate the potential income and tax benefits I might receive from establishing a charitable gift annuity?
You can access Silicon Valley Community Foundation’s planned giving calculator to run these calculations.
If I have more questions, where can I turn?
Please call 650.450.5444 or email firstname.lastname@example.org.