The charitable gift annuity is the most popular life income plan Davidson offers, primarily because it is simple and inexpensive to create, and because it pays a steady and predictable income at attractive rates which are unaffected by fluctuations in the financial markets.
What can a gift annuity be funded with?
Cash, securities, or property which can be immediately liquidated and reinvested to produce income. Davidson will accept illiquid property to fund a gift annuity only under unusual circumstances.
How long can a gift annuity pay income?
For the lifetime(s) of the income beneficiaries only.
How many income beneficiaries can a gift annuity have?
One or two individuals.
How many charities can a gift annuity benefit?
Davidson must be the sole charitable beneficiary of annuities it issues. The remainder of annuities underwritten by the Presbyterian Church (U.S.A.) Foundation can be split between Davidson and other Presbyterian causes.
How much income does a gift annuity pay?
There is no minimum rate. The maximum rate any charity offers is based on the ages of the income beneficiaries; Davidson uses the rate tables calculated by the Presbyterian Church (U.S.A.) Foundation and the American Council on Gift Annuities, which are based in turn on actuarial data. Rates change on a regular basis. For the latest rate info please contact a member of our Planned Giving Staff: Gray Dyer '96 at 704-894-2478 or James Gibert '79 at 704-894-2469.
How is the amount of gift annuity income determined?
In advance; payments are of equal and fixed annual dollar amounts, and cannot be changed. The rates shown above are the maximum rates available; donors can always choose to receive a lower rate, which will increase the size of their immediate income tax deduction.
How often is (or can) gift annuity income be paid?
Usually quarterly, though it can be paid monthly, semiannually, or annually.
When does a gift annuity have to begin paying income?
At a date specified when the gift is made. The starting date can be immediate, or deferred until a later date. Deferring the receipt of the income increases the size of the annual payments, and increases the immediate tax deduction. This can make the deferred annuity a useful retirement income planning vehicle even for younger donors.
How is the income from a gift annuity taxed?
If the annuity is funded with cash, part of each payment is ordinary income and part is a “return of principal,” which is tax free. If appreciated property is use to fund the annuity, another portion of each year’s income is also taxed as long-term capital gain. The amount taxed at the capital gain rate is the difference between the present fair market value and the donor’s cost basis in the donated asset. The Planned Giving Office will be happy to provide an illustration of this income breakdown at your request.
What formalities and documents are required to create a gift annuity?
A one-page contract.
How are the assets in a gift annuity administered and invested?
In a mix of dividend-paying stocks and bonds of varying duration, under Davidson's life income gift management arrangement with State Street Global Advisors.