The basics of “planned giving” are right there in the name: It’s a form of charitable giving that’s planned. But the planning part, well, sometimes it can be hard. After all, taking the time to sit down and think about the future in any capacity–nonetheless charitable giving–often seems intimidating. And once you begin to consider the types and forms of planned gifts, you may find yourself even more lost than when you started.
But when you break down specific options, you might find the world of planned giving becomes a bit less daunting and you may even be surprised by the options that are out there. As such we wanted to explore in a little detail the Charitable Gift Annuity, a form of giving that has benefits for you and a non-profit of your choice.
Here are some common questions and answers about Charitable Gift Annuities answered by The ALS Association National Director of Planned Giving Jessica Chapman, including some specifics as they relate to the ALS Association and the St. Louis Regional Chapter:
What is a Charitable Gift Annuity?
A Charitable Gift Annuity is a gift agreement between a donor and a charity. The donor transfers either cash, publicly traded stock or mutual funds to the charity. In return, the donor receives a partial charitable deduction from the gift as well as fixed payments from the charity for the rest of their life.
Why will I only receive a partial charitable deduction from a charitable gift annuity?
You will receive a federal income tax deduction for a portion of your gift, based on the full value of the gift you contribute minus the value of the life-income you will receive.
Additionally, if you fund a Charitable Gift Annuity with appreciated assets such as stock or mutual funds, you will not pay capital gains tax on the transfer. Only a portion of your capital gain will be reportable, and the tax will be spread over your annuity payments.
How does a Charitable Gift Annuity work?
When a donor chooses to establish a Charitable Gift Annuity with a non-profit organization, such as The ALS Association St. Louis Regional Chapter, they transfer cash, publicly traded stock or mutual funds, or a combination of all three, to The ALS Association.
In exchange, The ALS Association will pay the donor, or any two beneficiaries the donor names, a fixed income for life. The income depends upon the amount transferred and the age(s) of the beneficiary when the gift is established.
At the end of the beneficiary’s life, the remainder passes to The ALS Association St. Louis Regional Chapter to be used to support the ALS community.
How much can I transfer?
The ALS Association’s minimum gift amount required to set up a Charitable Gift Annuity is $10,000.
How old do beneficiaries need to be?
The ALS Association requires beneficiaries be at least 60 years old.
How are my payments insured?
All payments to Charitable Gift Annuity beneficiaries are backed by The ALS Association’s unrestricted assets.
Why should I set up a Charitable Gift Annuity?
A Charitable Gift Annuity is a gift that will significantly advance our shared vision of a world without ALS. It also provides a way to diversify income, guaranteed for life, especially in retirement years.
It was certainly a good fit for Claire W., who set up a Charitable Gift Annuity in memory of her son, Ernie, who passed from ALS.
“It seemed natural to take advantage of the Association’s gift annuity program. My donation not only provides me with generous payments but a helpful tax deduction as well. I challenge anyone affected by ALS to research the various giving options the Association has to offer. Down the line, there will be a cure and you will want to know that you were a part of it.”
I have questions. Who should I speak with?
If you’re curious about what a Charitable Gift Annuity looks like for you, please contact Katie McGovern via email at KMcGovern@alsastl.org or by phone at 314-432-7257. There is no obligation to make a gift. We are simply here to help.
This post is intended to provide general gift planning information. The ALS Association is not qualified to provide specific legal, tax or investment advice, and this post should not be looked to or relied upon as a source for such advice. Consult with your own legal and financial advisors before making any gift.