Charitable Gift Annuity
Mary’s Story
Mary, age 75, irrevocably transfers a $10,000 gift of cash to the Catholic Community Foundation in return for a guaranteed life income annuity. The Foundation is able to guarantee her a 7.1% annuity payment (rates vary based on the age of the annuitant) or $710 ($10,000 x 7.1%) annually for her lifetime (67% of which is tax-free). At the same time, Mary is eligible for a $4,081 federal income tax deduction (using a 4% IRS rate). She has designated that upon her death, the remainder of her gift annuity arrangement goes directly to her own parish.
TO SEE WHAT LIFETIME INCOME RATE YOU WOULD RECEIVE FROM A GIFT, CLICK ON OUR GIFT CALCULATOR.
Deferred Charitable Gift Annuity
Mike and Mary’s Story
Like many couples in their 50’s, Mike and Mary (age 58 and 60 respectively) are planning their retirement. They recently inherited $50,000 and wanted to make a charitable gift to support the Catholic Community Foundation.
Choosing a Deferred Charitable Gift Annuity as a vehicle for their gift, they are assured of a lifetime annuity of 9.3% of their gift – $4,650 per year – when they are ready to retire in 10 years. Together with a current year tax deduction of $12,304 (using a 4% IRS rate) some 38% of the annual income is tax-free!
Charitable Remainder Unitrust
Henry and Martha’s Story
Henry, age 66, and Martha, age 59, have accumulated shares of publicly traded stock that are presently valued at $300,000. The shares were purchased 20 years ago at a cost of $6,000. Henry and Martha are concerned about the tax they would have to pay should they sell their stock with a capital gain of $294,000 ($300,000 minus $6,000). Because they desire to support several Catholic and civic causes, they irrevocably transfer the highly appreciated stock into a charitable remainder trust, in exchange for a 7% annual income payout rate for the rest of their lives. The initial gift will be invested through the trust and revalued annually. During the first year, their annual income will be $21,000 ($300,000 x 7%). Not only was the tax on the $294,000 capital gains completely avoided, but the couple was also eligible for a federal income tax deduction of $60,756 (using a 4% IRS rate). Henry and Martha designated that upon their deaths, the remainder of their trust arrangement be assigned so that 50% would go to their parish endowment fund in the Foundation and 50% would be distributed to their other favorite charities whose goals are not antithetical to the teachings of the Roman Catholic Church.
Donor Advised Fund
John and Sue’s Story
John and Sue, ages 44 and 42 respectively, are both professionals who have done well with their investments. They decided to establish a CCF Donor Advised Fund to help teach their children about giving back to the community. They used appreciated stock worth $25,000 to initially set up their family fund. Now they regularly sit down with the kids to look at the wide array of charities they can support. The kids learn about those who are less fortunate, help advise who receives gifts from their fund and then they pray as a family for the causes they support.
They were able to fully deduct the $25,000 charitable gift from their taxes and avoided paying capital gains on the appreciated value of the stock (which was $15,000 – so they also saved $2,250 in capital gain tax based on the 15% rate).
Donor Advised Fund
Betty and Bob’s Story
Betty and Bob, both age 62, wanted to find a way to financially sustain their parish and a number of other charities well after they were gone. They also owned a piece of hunting property up north that they bought for $5,000 in 1960. No one in the family used the land any more, so they donated the land worth $200,000 to set up their own CCF Donor Advised Fund.
They received a $200,000 tax deduction for the gift. Also, by donating the land instead of selling it themselves, they saved $29,250 by avoiding capital gains taxes of 15%. Now they enjoy making grant recommendations and know that their charities will continue to benefit in future generations thanks to their CCF Donor Advised Fund.
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