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Charitable Gift Annuity
A charitable gift annuity is a simple contract between you and Chatham University. In exchange for your irrevocable gift of cash, securities, or other assets, the College agrees to pay one or two annuitants you name a fixed sum each year for life. The payments are guaranteed by the general resources of the College. The older your annuitants are at the time of the gift, the greater the fixed income Chatham can agree to pay.
In most cases, part of each payment is tax-free, increasing each payment’s after-tax value. If you give appreciated property you will pay capital gains tax on only part of the appreciation. In addition, if you name yourself as the annuitant the capital gains tax will be spread out over many years rather than be all due in the year of your gift.
Benefits of a charitable gift annuity
- The annuitants you name will receive fixed annual income for life—in many cases a larger income than the gift property is presently earning for you.
You will qualify for a federal income tax deduction.
- If you fund the annuity with an appreciated asset, you will incur tax on only part of the gain. If it is funded with cash, a substantial part of the annual payments may be entirely tax-free.
- Your estate may enjoy reduced probate costs and estate taxes.
- You will provide generous support of Chatham University.
Example of a charitable gift annuity:
Anna D., class of 1948, irrevocably transfers $50,000 in cash to Chatham University. As a 75 year-old, Anna qualifies for a 7.9% annuity rate and receives $3,950 in income each year, $2,409.50 of which is tax-free. Anna also benefits from a $20,104.50 charitable deduction in the year that she makes the gift. Finally, Anna is able to support, in a major way, a Chatham program in which she is especially interested.
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Providing for the Future
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Ruth Jenkins Horsburgh ’45 and Kenneth Horsburgh have quite a brood: three children, fourteen grandchildren—and four gift annuities. The Horsburghs are a wonderful example of how planned giving can help donors achieve their philanthropic goals and provide for themselves and their families.
In 1995, on the eve of Ruth’s 50th Reunion from PCW, she and Ken began exploring the different ways that they might make a meaningful gift to commemorate her milestone reunion. “I had been devoted to the College for more than half a century—it was a big part of my life. My closest friends at PCW are still my friends. I wanted to be able to give back to the place that had given me so much, in so many ways.”
As opposed to an outright gift, they decided that a life income gift, specifically a charitable gift annuity, would allow them to make a significant gift to Chatham. In doing so, Ruth and Ken not only met their philanthropic objective, but they also gained many benefits: they were able to take a charitable deduction, reduce their estate tax, and they were guaranteed a stream of income for the remainder of their lives—or the life of a loved one. And because they used appreciated stock to fund the gift, their capital gains tax was greatly reduced. “It was a win-win situation,” notes Ken.
They established their first annuity in 1995, shortly after the formation of The Dilworth Society, Chatham’s planned giving society. Since then, the Horsburghs have established three additional gift annuities. Ruth and Ken also have given to Chatham University in other ways; most recently, as members of the new Planned Giving Leadership Committee. “While so much has changed since my graduation in 1945, Chatham remains dedicated to educating women and providing them with unprecedented opportunities. Ken and I are delighted to help—we obviously believe strongly in both the College and this wonderful way to provide for the future.” |
