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Charitable Gift
The best of both worlds...
Supplement your retirement income
Give a gift to your favorite charity

Often people would like to donate to their favorite charity but are concerned about having sufficient income to take care of their needs. This is especially true when individuals retire and rely on a fixed income.

The Charitable Gift Annuity can provide the best of both worlds by enabling you to receive retirement income while also giving generously to charity. A charitable gift annuity is a contract between the donor and the charity where the donor makes a gift of cash or other appreciated assets, and in return receives (or may elect for someone else to receive) a fixed-payment annuity for life. At the time of the donor's death the assets go to the charity. With an Immediate Annuity, payments begin immediately. Deferred Annuities begin payments at a specified time in the future.
· In addition to receiving income for life, you may also contract for a survivor to receive payments.
· You can see the benefits of your gift while you are still living.
· You receive tax advantages.
The size of the payments depends on your age, life expectancy, if there is another annuitant, and the size of your gift. For example, if you are 68 and donate $300,000 through a gift annuity, at a rate of 7% (using the American Council on Gift Annuities rate), you would receive annual payments of $21,000 (typically paid annually, semi-annually or quarterly). Rates differ if you use yourself and your spouse as co-annuitants, or if someone else is an annuitant.

Since the creation of a charitable gift annuity is a donation, payout rates are less than similar annuities offered by commercial insurance companies. However, when the value of the deduction is calculated into your returns, payout rates are often closer to commercial rates.

The tax benefits of a charitable gift annuity are too complex to outline here. However, in summary, you receive an immediate tax deduction based on the difference between the fair market value of your donation and the smaller present value of the annuity income. In addition, each gift annuity payment is partially tax-free for the duration of your life expectancy. Payments received after you have reached your life expectancy are fully taxable. Donations are also free of estate taxes since you have taken those assets from your estate.

Finally, if you donate appreciated stock, the donation is not completely free of capital gains tax. However, a portion of the capital gains does escape taxes and the remainder is deferred and paid over the remainder of your lifetime.

International House and the UC Berkeley Office of Planned Giving can assist you with specific questions about Charitable Gift Annuities. For information, please contact
Kate McClintock, International House at (510) 642-0124, or
Rachel Sisemore Crawford, J.D., UC Office of Planned Giving at (510) 642-6300.
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