Charitable Gift Annuities
A Charitable Gift Annuity (CGA), as the name implies, is an annuity with a charitable component – it combines a gift with an investment. A gift annuity agreement is a contract between the charity and the annuitant(s) under which the charity is obligated to make fixed, lifetime income payments to the annuitant(s). A CGA can benefit one or two individuals and can be established at HIAS with a minimum gift of $10,000.00. This agreement is regulated by the State and is subject to certain reserve investment requirements.
The annuity rate is based on life expectancy and can be quite generous. For example, under HIAS’ current tables, payments for a single lifetime, beginning at age 77 may be calculated at a fixed rate of 7.4%. The gift will also generate a current charitable income tax deduction that is calculated by subtracting the present value of the anticipated income payments from the total amount contributed to establish the annuity. After the last payment is made, the charity will have access to the remaining funds.
If the annuity is purchased with cash, the income distributed each year will be paid to the annuitant(s) as both ordinary and tax-exempt income. If this is considered together with the available income tax deduction, the actual yield will be significantly higher than the fixed annuity rate. When appreciated securities are used to make the gift, the annual income will also have a capital gain component apportioned annually.
A variation of this vehicle is known as a Deferred Charitable Gift Annuity. It is similar in all respects to a CGA except that income payments are deferred until some future time. Although the payments are deferred, there is a current charitable income tax deduction. This deferral serves to raise the annuity rate considerably.
HIAS offers highly competitive CGA rates; examples of our rates for current single and two-life annuities appear below:
ONE-LIFE CGA TWO-LIFE CGA
To discuss any of the above planned giving options, or for any other information, please contact:
Associate Director, Individual Giving
866-337-3337 (Toll Free)