Frequently Asked Questions about Charitable Gift Annuities
What is a charitable gift annuity?
A charitable gift annuity is a contract between an individual and the AACR Foundation where, in return for a gift, the AACR Foundation agrees to pay the individual a fixed amount of money annually for the donor’s lifetime. After the individual’s lifetime, the balance in the annuity account is given to the American Association for Cancer Research (AACR) as the donor’s gift to support cancer research.
How does the AACR determine the annuity rates?
The AACR Foundation follows the rates set by the American Council on Gift Annuities, an independent nonprofit organization that recommends charitable gift annuity rates for use by charities nationwide. Life expectancy is one factor used in determining the rates. Therefore, older donors qualify for higher annuity rates compared to younger donors.
Are the gift annuity payments guaranteed?
Gift annuity payments are a general obligation of the AACR and the AACR Foundation. Even if an individual gift annuity account is exhausted, the AACR Foundation will still make annual payments for life to the annuitant. The AACR Foundation is a large and financially stable institution with extensive resources. It has never missed a payment to any annuitant.
How many annuitants may receive payments on a gift annuity?
A gift annuity can be based on one life alone, or two lives (husband and wife, for example). The annuity rate for two beneficiaries is always lower than for any single annuitant.
What assets should a donor use to fund a charitable gift annuity with the AACR Foundation?
Donors may use cash or securities (stocks, bonds or mutual funds) or a combination of both. Donating appreciated stock offers favorable capital gains treatment (see next question).
What are the tax benefits associated with a gift annuity?
In the year that a donor establishes a gift annuity, he or she is eligible to claim a charitable contribution income tax deduction for that tax year. The deduction amount is equal to the present value of the gift amount that the AACR Foundation will receive at some time in the future. If the donor cannot use the entire deduction amount in the first tax year (because the deduction exceeds the amount of income that may be offset), the deduction may be carried forward for up to five years. Donors should always consult their own tax advisors before making a gift. Each payment is partially tax-free for a number of years, a period measured by the donor’s life expectancy. After that period, the entire payment will be treated as ordinary income to the donor. If the donor funds the gift annuity with appreciated securities (whose market value exceeds the cost basis) that have been owned for more than one year, a portion of the capital gains tax (that would be due if the donor sold the stock) is avoided. The rest of the capital gains tax is paid ratably (proportionally) over the donor’s life expectancy period.
What is the minimum age and minimum amount for a gift annuity?
The minimum age for an AACR Foundation gift annuity is 60. The minimum gift amount is $50,000.
What if I have not reached 60 years of age but have an interest in establishing a charitable gift annuity?
The AACR Foundation welcomes the opportunity to work with donors under the age of 60. Donors who are at least 50 years old may use a plan called the deferred charitable gift annuity. Under that plan, a donor chooses a future time to start his or her annuity payments (such as upon retirement or reaching age 70).
Can a gift annuity be designated for a particular use or area at the AACR Foundation?
The AACR Foundation’s Individual and Planned Giving staff is here to help donors identify a program, fund, or project at the AACR Foundation that is meaningful to them.
How do I go about getting a CGA to support the AACR Foundation and its important work?
You simply make a phone call to our Individual and Planned Giving Office and let us know of your desire to establish a CGA. We provide you with a detailed illustration showing: your personal payment rate, your income tax deduction for the year, and your capital gains tax savings.
Can I receive an illustration before I decide to fund a CGA with the AACR Foundation?
Yes, we are happy to provide an illustration at no charge based upon the information you give us.
What information will I need to provide?
Your name, date of birth (month, day and year), address, and amount with which you wish to fund the CGA. If you include your spouse or other person on your CGA, his or her information would be needed, as well. We will also ask you to indicate the date of your anticipated gift.
If I am already retirement age can I still defer receiving my income payments?
Yes. In fact, the longer you wait to receive payments, the higher your percentage will be, thus the higher your income will be.
Do I receive a tax deduction for having a CGA?
Yes, but the IRS will not allow a dollar-for-dollar deduction, as you will be receiving a lifetime income.
Can I use my IRA or retirement account to fund a CGA?
You can use those funds, but the IRS will not allow you to simply roll those over into a CGA without paying your taxes on those monies since you will be receiving the tax deduction for the CGA.
Can I withdraw the funds after I get a CGA?
No. The IRS deems a charitable gift as irrevocable.
What happens to any remaining funds upon my death?
If the CGA is in your name only, any remaining funds would go to the AACR. If you included a second person on your CGA, that person would continue to get the payments until his or her death. Any remaining funds would continue to support the mission of the AACR and its important work to cure cancer.
For more information and to request an illustration, contact us today.
Aruna K. Pappu, Esq.
Email: [email protected]
Not available in all states. A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with Oklahoma Insurance Department. Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.