A Gift Annuity is a contractual arrangement between a donor and a charity whereby the charity agrees to make fixed periodic payments to one or two individuals (annuitants) in exchange for money or assets transferred to the charity. The donor is usually the only annuitant or one of the two annuitants. Typically, the periodic payments are made until the death of the annuitant (or the survivor of the two annuitants). From the donor’s perspective, the transaction is both an establishment of an annuity and a charitable contribution.
There are several types of Gift Annuities:
- The Single Life Gift Annuity is based on one person’s life, whether it is the donor’s or the life of a friend or relative of the donor.
- A Two-Life Gift Annuity is based on the lives of two people and is to be paid until the death of the survivor of them.
- Under a Deferred Gift Annuity, the annuity payments are to begin at some future date, usually at a higher rate. The donor is still entitled to an immediate charitable income tax deduction.
Gift Annuities have become popular recently, due in large part to their simplicity. They offer a number of benefits to the donor:
- A fixed payment for the rest of the donor’s life.
- A charitable income tax deduction for the year in which the Gift Annuity is established.
- A gift to the donor’s favorite Archdiocesan organization, ensuring that the donor’s generosity will continue beyond his or her lifetime. Additionally, if the Gift Annuity is funded with appreciated stock or securities, the donor may obtain favorable capital gain results.
The Archdiocese has established minimum ages and amounts for Gift Annuities. For Single Life Annuities, the minimum gift amount is $2,500, while it is $5,000 for the Two-Life and Deferred Gift Annuities. The minimum age is 50 for all Gift Annuities.
For more information on Gift Annuities, please contact the Office of Stewardship and the Annual Catholic Appeal at 314.792.7680.
IRS Circular 230: Charitable giving has tax implications. Please consult your personal tax advisors and please click here to review important tax disclosures.