Flexible and secure, a charitable gift annuity provides a guaranteed lifetime income paid to you and/or your beneficiaries. Your gift may be composed of cash or appreciated assets such as securities or real estate.
When you create an annuity, you earn an income tax deduction based on the amount of the gift and the age of recipient(s). Additionally, a part of every annual income payment may be considered tax-free. Hence, this gift can allow you to avoid taxes while advancing City of Hope’s research and patient care initiatives.
Flexible to Meet Your Needs
There are two types of annuities, both of which provide payments that may be received tax-free:
- Current Charitable Gift Annuity
An ideal option for people seeking a steady and reliable cash flow, a current charitable gift annuity begins paying income right away.
- Deferred Charitable Gift Annuity
Payments from this gift are deferred until a later date such as retirement. You will still enjoy an immediate income tax deduction upon the creation of the gift. Younger donors often find this option attractive when planning supplemental retirement income. With deferred charitable gift annuities, a higher payout rate is provided because the principal has an opportunity to appreciate over time.
Charitable Gift Annuities in Action
Below is an example of a charitable gift annuity, its tax benefits and projected income payouts for a 75-year-old with a single life annuity.
The Situation
- Donor’s property gift value = $50,000
- Cost basis of property = $10,000
- Capital gain = $40,000
- Potential capital gains tax liability = $6,000
The Solution
- Fixed payment for life
- Higher than market rates of return
- Current income tax deduction
- Create a current charitable annuity at 6.7% = $3,350 annual annuity for life
- Part of the annual annuity income payment is tax-free; a portion is recognized as capital gains and a part is recognized as ordinary income
- Tax deduction realized = $22,420
City of Hope’s gift planning officers welcome your inquiries at giftplanning@coh.org or 800-232-3314.