The concept of the charitable gift annuity in America dates back to 1843, when a merchant in Boston first donated a gift of money to the American Bible Society in exchange for a flow of income. Today, the concept includes valuable tax benefits for donors along with philanthropic satisfaction by helping support the Society mission and good works.
A gift annuity is a simple, contractual agreement between a donor and the Society in which you give assets to the Society in exchange for our promise to pay one or two annuitants payments for life.
By donating through a gift annuity, you:
- contract for a fixed payment for yourself or yourself and another individual, if you choose, and
- make a gift to the Society.
If you itemize deductions on your tax return, savings from the charitable deduction reduce the net cost of the gift.
For a period of years, based on a government table of life expectancies, a portion of each payment received is considered a nontaxable return of a portion of your gift. This means a portion of each payment you receive is income tax free. This further increases your after-tax dollars available for spending or investing.
An annuity funded with appreciated property results in these additional advantages:
- the gain allocated to the gift portion completely avoids the capital gains tax, and
- the portion of gain to be recognized can be spread over the expected term of the contract (provided that the donor is a primary annuitant and the annuity interest is assignable only to the charitable organization).
Establishing a charitable gift annuity is a wonderful way for you to secure steady payments for yourself while providing benefits for the Society.
For more information on charitable gift annuities, please contact Karen.Barton@nmss.org at 760-448-8412.
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