Charitable gift annuities (CGAs) offer a simplified solution for someone who wants to ensure lifetime income while contributing to charity. With a CGA, you qualify for a federal income tax charitable deduction in the year you make the gift. The charity then invests the assets and pays you a fixed annual income for the remainder of your life.
and features. Download the guide and share with your donors today.
What are the benefits?
Philanthropic Benefits: A Gift for the Future
- Give donors peace of mind knowing their assets are going to their favorite charity
- Simplified charitable giving—the charity does the administration
Financial Benefits: Income for Life
- Donors receive a fixed payment every year that will not vary
- Diversify a portion of your donor's portfolio while producing a reliable income stream for life
- Potential tax benefits, including a charitable deduction and tax-free income
Giving with Greater Flexibility
Along with a philanthropic commitment, CGAs offer your donors flexibility when planning for their future financial security with the option to:
- Start annuity payments immediately or at a future date
- Convert non- or low-income producing property into an income stream
- Receive payments as part ordinary income, part capital gain, and part return of principal
- Save on capital gains taxes when CGAs are funded with appreciated assets
CGA or Commercial Annuity? Compare and Choose
Do you have donors that want a fixed income for themselves or a loved one? CGAs offer a competitive return (when taking into account tax savings from the charitable deduction) while also making a significant charitable gift.
| Charitable Gift Annuities | Commercial Annuities | |
|---|---|---|
| Lifetime Income | ||
| Simple one- or two-page contract | ||
| Tax Savings from charitable deduction | ||
| Reduced out-of-pocket costs | ||
| Gift to charity at end of contract |
Charitable Gift Annuities in Action
Edith is a 70-year-old woman interested in funding a $100,000 annuity. See how much income she could secure with a CGA versus a commercial annuity.
| Charitable Gift Annuity | Commercial Annuity | |
|---|---|---|
| Annuity Amount | $100,000 | $100,000 |
| Tax Deduction | $37,512 | $0 |
| Tax Savings on Deduction | $11,254 | $0 |
| Contract Out-of-Pocket Cost | $88,746 | $100,000 |
Payout Rate (ACGA Rate/ Estimated Commercial Rate) |
6.3% | 8.0% |
| Annual Payment | $6,300 |
$8,000 |
| Rate of Return on Contract* | 7.1% | 8.0% |
| Estimated Life Expectancy | 22 | 22 |
| Estimated Payments over Life of Contract** | $138,600 | $176,000 |
| Estimated Gift to Charity at Contract End** | $42,053 | $0 |
*Net of tax savings (federal and state taxes at 30%)
**Long term investment return estimated at 4.75%
***Estimates are in nominal dollars and do not consider the present value of the future expected cash flows
The example used describes a hypothetical client and experiences for educational purposes only. Individual results and experiences will vary.
Expand Your Donors’ Giving Options:
Funding a CGA with a QCD
A Qualified Charitable Distribution (QCD) is a powerful giving tool that allows donors to transfer up to $54,000 directly from their IRA to fund a CGA – making a lasting impact on your organization while creating a source of lifetime income.
Count toward requirement minimum distributions (RMDs) but aren’t included in taxable income
Allows donors to convert pre-tax retirement assets into charitable gifts while securing income
Offer a significant tax advantage
Is a QCD Right for Your Donor?
- Is your donor 70 ½ years or older?
- Does your donor want to make a meaningful gift to their favorite charitable organization?
- Does your donor have a RMD this year?
- Does your donor want to reduce their taxable income?
- Is your donor interested in making a charitable gift that pays them annually for life?
Answering yes to any of these questions could mean a QCD is right for them.
Secure Your Donors’ Futures
Help your donors achieve both their philanthropic and financial goals.
TIAA Kaspick does not provide legal or tax advice. TIAA Kaspick provides tax preparation services under the terms of each client’s gift administration agreement. This publication is not intended to be used, and cannot be used (i) for the purpose of avoiding tax-related penalties, or (ii) to promote, market, or recommend to another party any transaction or matter addressed. (IRS Circular 230 Notice).
While all information presented here has been carefully reviewed, the accuracy of third-party data or research cannot be guaranteed. These views may change in response to changing economic and market conditions. Past performance is not indicative of future results.
The material is for informational purposes only and should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. The information and data contained in this publication are not intended to provide personalized investment advice or gift planning recommendations.
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