Planned Giving 101: Charitable Gift Annuities

Planned Giving 101: Charitable Gift Annuities

Meet Jim*. Several years ago, he invested money for himself and his wife, Bonnie, in a bank CD, but Bonnie passed away before it matured.

Jim and Bonnie had always been active church members. Bonnie served for years as a Sunday school teacher. When the CD matured, Jim decided he wanted to honor her with a gift to their church. He also needed money to live on. He feared he wouldn't be able to give as much to the church as he hoped.

The solution? A Charitable Gift Annuity.

How does it work?

A Charitable Gift Annuity is a planned giving tool by which you can transfer cash, stock, or other appreciated assets to a charity and receive both tax benefits and fixed payments during your lifetime. Upon your death, the remainder goes to the organization. Assemblies of God Foundation allows you to designate half of the remainder to any ministry of your choice, including your local church.

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Jim discovered he could receive an income stream of 7.2% from his Charitable Gift Annuity based on his age. In addition to this fixed payment, he could also receive a charitable income tax deduction. He decided to transfer $100,000 from the CD to Assemblies of God Foundation to create the annuity and has been pleased.

"The gift annuity was a good decision. I know it's something that would have pleased Bonnie. And it's a blessing to me also. I'm saving thousands in income taxes, and the income I'm receiving is dependable and more than I was getting from my CD."

Who benefits most from a Charitable Gift Annuity?

A Charitable Gift Annuity may be an ideal solution if you:

  • Are over age 70
  • Want a dependable lifetime income for you and/or your spouse
  • Wish to convert a low-interest investment (CD, savings account) into lifetime income
  • Want to realize tax savings and avoid upfront capital gains on appreciated assets, like stocks
  • Wish to leave a charitable gift

How do the tax benefits work?

With a Charitable Gift Annuity, you are transferring the asset to an organization as a gift. The potential tax benefits can be two-fold, including both a charitable tax deduction and a partial bypass of capital gains taxes on appreciated assets. Upon transferring the asset, you are eligible for an immediate tax deduction. As for capital gains tax, for example when dealing with appreciated stocks, the tax would be based on the difference between the original cost of the stock and its current value. If you were to simply sell the stock, you would pay federal, and in most cases, state capital gains taxes. But by transferring the stock as part of a Charitable Gift Annuity, it’s possible to avoid upfront payment of those taxes and, depending on the situation, possibly bypass a portion of those taxes completely.

I don't have much money set aside. Can I still set one up?

Yes. Compared to other types of giving vehicles, Charitable Gift Annuities have a relatively low funding minimum of $5,000, making them a popular option for those with fewer assets.

For futher information about Charitable Gift Annuities and other giving tools, download the free Planned Giving Guide below.

To find out if a Charitable Gift Annuity could work for you, call 866.621.1787 or email us, and one of our planned giving consultants will contact you shortly.

 

*This example is based on a hypothetical fact scenario and is intended for illustration purposes only. The terms, tax benefits, and expected income are dependent on several variables that are different in each situation. Consult your tax advisor for more information that is specific to your situation. Upon the death of the annuitant or the survivor of the annuitants, payments will cease. At that time, one-half of the reminder will be retained in the fit annuity fund to ensure the ongoing financial strength of the gift annuity program, and the other one-half of the remainder will be released to Assemblies of God Foundation for ministry benefit. If undesignated, the released portion will be placed in the Foundation endowment fund, and the specific ministry to benefit each year will be decided by the Executive Presbytery based upon where it is most needed.
Charitable Gift Annuities are available in most states, but there are a few exceptions. Depending upon the laws of the state in which you live, your Assemblies of God Charitable Gift Annuity will be issued by the General Council of the Assemblies of God or Assemblies of God Foundation and will be a general obligation of the issuing organization. Assemblies of God Foundation is an affiliated entity of AG Financial Solutions. Charitable Gift Annuities are not available in Alabama, Hawaii, Montana, New Jersey, New York, or Washington.
Additional information for Arizona residents:
Assemblies of God Foundation (“Foundation”) was organized under the laws of the State of Missouri on December 22, 1992, and is a qualified charity under section 501(c)(3) of the Internal Revenue Code or any successor provisions. This Charitable Gift Annuity is not insurance under the laws of the State of Arizona, is not subject to regulation by the Director of Insurance, and is not protected by any State Guaranty Fund. The State of Arizona and the Department of Insurance have neither approved nor disapproved of the Charitable Gift Annuity being offered, nor have they reviewed the information provided to determine its accuracy or completeness.
Additional information for California residents:
AG Foundation does not practice law and no legal advice is provided. If you need legal advice, you should consult your own legal counsel.
Additional information for Oklahoma residents:
A Charitable Gift Annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department.
Additional information for South Dakota residents:
Charitable Gift Annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.