Charitable Gift Annuities:
Gifts That Give Back
Receive Income for Life and Save on Taxes
When we give, it is because we support a certain cause or mission. Not because we expect something in return. However, there are gifts that allow you to support the Sisters of Providence while also receiving benefits. Charitable gift annuities are gifts that give back and pay you income for life.
How It Works
When you create a gift annuity, you make a contribution of cash, appreciated securities or other appreciated property owned longer than one year to the Sisters of Providence. In return, you receive fixed payments for the rest of your life. The annual rate of your payment is based on your age at the time of the gift. The older you are, the higher the rate. Your payment rate does not fluctuate with the stock market, interest rates or inflation. It is firmly set at the time of your gift and never changes. After your lifetime, the Sisters of Providence uses the remaining balance for our work.
You can also provide payments for another individual — typically your spouse, but it could also be a parent, adult child, family member or friend. Or you can establish a two-life gift annuity that pays you and another person if you choose.
Benefits of a Charitable Gift Annuity When Funded With Cash or Appreciated Securities
- Older annuitants (the person or people receiving the CGA payments) have higher payment rates.
- You have potential to receive increased disposable income.
- You may receive an income tax charitable deduction (if you itemize) in the year you set up the gift annuity.
- Each year a portion of your payment is income tax-free, until you reach your anticipated life expectancy.
- If you fund your gift annuity with appreciated property, rather than cash, you could benefit even more with favorable capital gains tax treatment at the time of your gift.
- After your lifetime, the remaining portion of your gift will support our mission, helping to fulfill your philanthropic goals.
Keep Your Cash!
You can fund a charitable gift annuity with more than just cash — use securities or your IRA assets.
Perhaps you have stock that is producing lower dividends than you had planned on, or you have securities that have turned out to be more risky than you are currently comfortable with. You can exchange those for a secure, stable gift annuity and maintain day-to-day financial security and minimize capital gains tax. Talk with us or your financial advisor about creative options for funding a gift annuity.
If you are 70½ or older, you can use your IRA to create a gift annuity. Get fixed, reliable income for life by making a one-time election of up to $53,000 — without being taxed on the IRA distribution! This option comes with special rules, so contact us to discuss whether this is right for you.
An Example
Our donor, age 75, plans to donate stock worth $25,000 to the Sisters of Providence. Because they need continuing income, they decide to give the stock in exchange for a one-life charitable gift annuity at the suggested rate of 7.0%, or $1,750 per year.
Because our donor itemizes their tax deductions, they qualify for a federal income tax charitable deduction of $10,379* (the amount of the $25,000 donation attributable to the gift portion). With a marginal income tax bracket of 32%, the tax savings of $3,321 reduces the net cost of the gift to $21,679.
In the chart you will see recommended rates from the American Council on Gift Annuities, which most nonprofit organizations follow. Check with our representative for current rates and applicable ages for charitable gift annuity eligibility.
| One Recipient | |
|---|---|
| Age | Rate |
| 60 | 5.2% |
| 65 | 5.7% |
| 70 | 6.3% |
| 75 | 7.0% |
| 80 | 8.1% |
| 85 | 9.1% |
| 90+ | 10.1% |
| Two Recipients | |
|---|---|
| Ages | Rate |
| 60/65 | 4.8% |
| 65/70 | 5.2% |
| 70/75 | 5.8% |
| 75/80 | 6.5% |
| 80/85 | 7.3% |
| 85/90 | 8.7% |
| 90/95 | 9.9% |
*Based on a 5.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
Next Steps
We want to work with you to create a gift that best fits your circumstances and our needs. To learn more about the benefits of establishing a charitable gift annuity with the Sisters of Providence, please contact us today.
Cami Pritchett
Constituent Engagement and Planned Giving Manager
Phone: 812-535-2807
Email: cpritchett@spsmw.org
1 Sisters of Providence
Saint-Mary-of-the-Woods, IN 47876
Information contained herein was accurate at the time of posting. The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. California residents: Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. Oklahoma residents: A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. South Dakota residents: Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.
Contact Us
Cami Pritchett
Constituent Engagement and Planned Giving Manager
Phone: 812-535-2807
Email: cpritchett@spsmw.org
1 Sisters of Providence
Saint-Mary-of-the-Woods, IN 47876