Charitable Gift Annuity Program: An Opportunity to Invest in the Community and the Future
July 2003 - Investing can be a complicated and time-consuming process, but a new program from the Memorial Foundation and the Joe DiMaggio Children's Hospital Foundation combines investing with charitable giving for numerous advantages.
The Memorial Foundation and the Joe DiMaggio Children's Hospital Foundation, established through Memorial Healthcare System, have enhanced their planned giving program with a Charitable Gift Annuity Program. A gift annuity, which is a contract between a donor and a charitable organization, can provide a donor with an annual stream of income between 6 percent and 11 percent, depending on the donor's age and the kind of gift selected.
"Charitable gift annuities have been part of estate and retirement planning for many years," says Jennifer Jones, Director of Planned Giving for the Foundations. "Given current economic conditions, a charitable gift annuity can be a viable investment choice for donors." Through the Foundation's new outreach program, Jones will work closely with potential donors and outline the benefits of annuity investing.
How the Program Works
A minimum of $10,000 is required to establish an annuity. Older donors receive a higher rate of return on their investment. For example, a person age 60 might receive a set single-life rate of return of 5.7 percent annually, while an 87-year-old donor would lock in a rate of more than 10 percent.(All rates are established by the American Council on Gift Annuities and are based on the age of the donor at the time of the agreement.)
Payments may be made for one to two beneficiaries. Usually, donors name themselves as beneficiaries, but annuity payments can be designated for others, such as children, parents or siblings. Deferred annuities, with payments beginning at a future time, can also be established.
The rate of payment on each annuity is set and fixed when the annuity begins. Generally, additional annuities purchased after the initial gift have higher rates of return because they are purchased later, and the donor is older. Payments are never affected by fluctuating interest rates or changes in the national economy, and annuity agreements are backed by all net assets of the Foundations
Annuities Offer Tax Advantages
Because an annuity is used for charitable purposes, the donor is entitled to a federal income tax deduction in the year of the gift. A portion of the annual payment to the donor is tax-free for a period of years as well. Donors may give securities instead of cash to set up an annuity. Securities that have increased in value, and have been held for more than a year, also offer tax savings.
If you would like more information about the Charitable Gift Annuity Program at Memorial, please call Jennifer Jones at (954) 985-3454.