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The Charitable Gift Annuity

A charitable gift annuity is an excellent option when a reasonable income from investments is difficult to achieve. It is a special arrangement that can be offered only by charitable organizations such as Clarion University Foundation, Inc. A charitable gift annuity is among the oldest, simplest, and most popular of the life income plans.  As part gift and part income, it can:

  • Provide a guaranteed income for life for one or two people.
  • Generate a rate of return significantly greater than traditional fixed income investments.
  • Provide a charitable tax deduction when you itemize your income taxes.
  • Support Clarion's mission to provide the best possible education for its students.

In exchange for your irrevocable gift of cash or securities valued at $5,000 or greater, Clarion University Foundation, Inc. guarantees to pay the donor, and, if desired, a second beneficiary, a predetermined annual income for life.

The American Council of Gift Annuities recommends rates of return based upon age of the beneficiaries receiving the income.  Income usually begins within the year the agreement is established but may be deferred to a predetermined date in the future, such as retirement.  After the lifetime of the beneficiaries and the annuity no longer pays income, the remaining principal/gift is used by Clarion as the donor has designated. 

Donors are ale to claim a charitable deduction for the "gift portion" of the transferred assets.  The deduction is calculated as the difference between the property value transferred and the present value of the anticipated annuity payments.

A portion each annuity payment is tax free and will remain tax free for a certain number of years in accordance with IRS tax schedules.  When appreciated securities, rather than cash are donated, the tax-free potion is reduced, yet the capital gains tax on long-term appreciation is also reduced.  Receiving an annual payment, including tax- free income, along with the opportunity to claim a charitable deduction often results in a rate of return that exceeds current bond or certificate of deposit rates.  Therefore, a charitable gift annuity can be an attractive investment.

Clarion University Foundation, Inc's gift annuity funds are backed by the assets of the foundation and are managed similar to Clarion's endowment funds by PNC Advisors.  Annuity payments are paid quarterly directly to the beneficiary or to a deposit account of their choice.  The beneficiary receives and IRS Form 1099-R for preparation his/her personal income tax return at the calendar year end.

In addition to supporting Clarion university, a charitable gift annuity could help accomplish one's retirement and estate planning goals.  Annuities are attractive to younger donors who have a high current income, can benefit from a current tax deduction, and are interested in supplementing retirement income.  For older donors, the higher rates of return alone are very attractive.

To receive a personal gift annuity illustration, call  814-393-2572 or e-mail giving@clarion.edu .

$10,000 * Charitable Gift Annuity Example
Assumptions:
  • IRS Discount Rate of 5.8%***
  • Single Life Annuity
  • 28% Federal Income Tax Rate
  • Cash Gift of $10,000
Age Income Rate Guaranteed Annual Income Tax-Free Portion Charitable Deduction Effective Rate of Return**
           
50 5.3% $530 $214 $2,947 6.7%
55 5.5% $550 $238 $3,211 7.1%
60 5.7% $570 $266 $3,581 7.5%
65 6.0% $600 $3,047 $3,949 8.1%
70 6.5% $650 $360 $4,277 9.0%
75 7.1% $710 $428 $4,688 10.1%
80 8.0% $800 $522 $5,101 11.7%
*The $10,000 figure is merely a convenient multiple. We will be glad to provide calculations for any gift amount $5,000 or greater.
**Effective Rate of Return takes into account the donor's charitable tax savings and the benefits of tax- free income. A higher Federal Income Tax Rate would result in a higher Effective Rate of Return.
***Discount Rate available through May 2007.

 $10,000 * Deferred Charitable Gift Annuity Example

Assumptions:
  • IRS Discount Rate of 5.8%***
  • Single Life Annuity
  • 28% Federal Income Tax Rate
  • Cash Gift of $10,000
Age Age Income Begins Income Rate Guaranteed Annual Income Tax-Free Portion Charitable Deduction Effective Rate of Return**
             
35 65 27.5% $2,750 $212 $5,781 33.8%
40 65 21.3% $2,130 $219 $5,625 26.3%
45 65 16.5% $1,650 $229 $5,449 20.5%
50 65 12.8% $1,280 $239 $5,230 16.1%
55 65 9.9% $990 $253 $4,961 12.6%
60 65 7.7% $770 $273 $4,554 10%
*The $10,000 figure is merely a convenient multiple. We will be glad to provide calculations for any gift amount $5,000 or greater.
**Effective Rate of Return takes into account the donor's charitable tax savings and the benefits of tax- free income. A higher Federal Income Tax Rate would result in a higher Effective Rate of Return.
***Discount Rate available through May 2007.

Charitable Gift Annuity Rates
Established by the American Council on Gift Annuities
 
Single Life Gift Annuity Rates
                               
55 5.5% 64 6.0% 73 6.8% 82 8.5%
56 5.6% 65 6.0% 74 6.9% 83 8.8%
57 5.6% 66 6.1% 75 7.1% 84 9.2%
58 5.7% 67 6.2% 76 7.2% 85 9.5%
59 5.7% 68 6.3% 77 7.4% 86 9.9%
60 5.7% 69 6.4% 78 7.6% 87 10.2%
61 5.8% 70 6.5% 79 7.8% 88 10.6%
62 5.9% 71 6.6% 80 8.0% 89 11.0%
63 5.9% 72 6.7% 81 8.3% 90 11.3%

Two Lives- Joint and Survivor Gift Annuity Rates

Age of Younger Life

Age of Older Life
  95 90 85 80 75 70 65 60 55
95 11.1%                
90 10.1% 9.3%              
85 8.8% 8.4% 7.9%            
80 7.8% 7.6% 7.3% 6.9%          
75 6.9% 6.9% 6.7% 6.6% 6.3%        
70 6.3% 6.3% 6.3% 6.2% 6.1% 5.9%      
65 5.8% 5.8% 5.8% 5.8% 5.8% 5.7% 5.6%    
60 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.4%  
55 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

  

Clarion University Foundation, Inc.
Center for Advancement
Clarion, PA 16214
P:814-393-2572 | F:814-393-1834 
Email: giving@clarion.edu 		Copyright 2005
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