Making a charitable gift annuity

When you establish a charitable gift annuity, you will receive fixed monthly, quarterly, semi-annual, or annual payments for life at an attractive payout rate.

You receive an immediate, partial charitable income tax deduction. And if you donate appreciated securities (stocks or mutual funds) to fund your gift annuity, you will enjoy capital gains tax savings as well.  

Your annuity payment is based on the payout rate, the gift amount, and the timing of your gift. You may choose immediate payments, or you may defer payment for one or more years, resulting in larger payments and potentially a higher income tax deduction.

Additionally, a significant portion of your annuity payment is typically tax-free. After your lifetime, animals in need will get the full benefit of your generosity.

For gifts of cash or appreciated securities, you receive a partial income tax deduction and a lifetime stream of income for you or someone you designate. This way of giving will also help you save on capital gains taxes if funded with appreciated securities.

Here are the most common options: 

Immediate payment annuity

Once you make your donation**, Best Friends will immediately start making annual fixed-income payments to you.

Annuity that reduces your capital gains taxes

If you have stocks or mutual funds that you have held a year or longer, you can use them to fund your gift annuity. By doing so, you can avoid a significant portion of the capital gains taxes.   

The remaining gain will be equally allocated over several years of your annuity payments and will not be taxed all at once.

Annuity with two beneficiaries

One of the great things about gift annuities is that they can be set up to benefit two people, making them a great retirement- and estate-planning tool for couples, whether or not the individuals are married. 

If either beneficiary passes away, the surviving beneficiary will continue to receive the full annuity payment each year for life.

Deferred payment annuity

The payout rate of an annuity increases with age.  If you don’t need immediate income, you can defer your first payment for a year or a number of years, you determine the best option for your income needs. When you defer payments, you will receive a higher payout rate.

*When funding a charitable gift annuity with funds from an IRA, you can avoid taxes by reducing your taxable income. Though there are limitations regarding gift amount, payments cannot be deferred, nor would you receive a charitable tax deduction. If you are interested in using funds from your IRA to set up a gift annuity, please reach out to us for further information.   

**There is a $10,000 gift minimum.  Beneficiaries must be 60 years of age to start receiving income.   

Best Friends can provide a customized illustration of how a charitable gift annuity could benefit you. We’ll calculate your payments and tax benefits based on your age and a sample gift amount, without obligation and in confidence.