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 A charitable gift annuity is an extremely flexible way to make a gift.
It can be designed to provide a fixed income for life for you and/or others you
choose and can be created with gifts of relatively modest amounts.
For example, you can make a gift through a charitable gift annuity agreement for as little as $10,000. Here’s how a
WWF charitable gift annuity works:
- You transfer cash or other assets to WWF to fund your gift annuity agreement. This involves completion of a simple agreement and can be handled conveniently by mail, if you wish.
- You’ll receive generous fixed payments annually (or more frequently if desired) that will never vary in amount. The amount of your payment is a percentage of your gift determined by your age and other factors at the time your gift is funded.
- You will be entitled to an immediate income tax charitable deduction. In addition, part of each annual payment is tax-free for the period of time equal to your life expectancy.
- If desired, you can also choose to name another person (typically a spouse, parent or sibling) to receive payments with you, instead of you, or following your lifetime for the remainder of his or her life.
(All annuitants must be at least 65 for immediate payment gift
annuities.)
- The assets used to fund your gift annuity will generally be removed from your estate for tax purposes.
- You make a significant gift to WWF for a portion of the amount used to establish your gift annuity agreement.
Some choose to fund a new gift annuity agreement with WWF each year. Since payment rates increase with age, each gift annuity generally brings larger annual payments.
When property, such as stock, that has increased in value is given for a gift annuity, part of the capital gains tax that would normally be due on its sale can be avoided at the time of the gift, and a portion of the gain can be reported over the annuitant’s life expectancy. The charitable deduction is typically based on the current value of the property, not its lower original cost. The use of appreciated, low-yielding assets to fund a gift annuity can thus be an excellent way to completely bypass capital gains tax at the time of your gift, enjoy a current income tax charitable deduction, and gain the advantage of reporting a portion of each payment at lower, more favorable capital gains tax rates for a number of years.
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For example: Maureen, 75, decides to give $20,000
for a WWF gift annuity. The payment rate at her age is 7.1%. She will
thus receive a payment each year of $1,420 for life and a tax deduction of
over $8,000 for the year of her gift.
In addition to the income tax deduction, over 60% of each annual payment
will be received free of tax for the first 12 years of her payments.
If Maureen had wished, she could have named her brother or another loved
one to continue to receive annual payments for his lifetime in the event of
her death. The payment rate and tax benefits in such a case would be
somewhat less since the payments would be made for two persons’ lives.
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| Amount transferred to WWF |
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... $20,000 |
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Rate of payment to Maureen |
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... 7.1% |
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Annual payment to Maureen for life |
| ... $1,420 |
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Immediate income tax charitable deduction |
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* ... $8,865
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*depends on IRS discount rate in effect
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Deferred gift annuities make even larger payments
that can begin when you retire or at another future date you choose.
For additional information contact us at legacygifts@wwfus.org.
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