Donors: Consider A Charitable Gift Annuity
Charitable gift annuities are becoming a popular way for donors to support their favorite charities
The annuities offer three advantages:
- They provide the donor with a fixed, pre-determined income for the rest of her life;
- They offer the donor a significant income tax deduction; and
- They may even enhance the donor’s current standard of living by increasing her income.
A charitable gift annuity is an irrevocable legal agreement between a donor(s) and Animal Protection of New Mexico (APNM). The donor gives cash, securities or appreciated property to APNM. In return, APNM gives the donor a fixed income for life, a portion of which is tax-free.
The annuity rate is based on the donor’s age and annuity rates increase as age increases. Gift annuity rates can range from 6.1% for an individual age 55 to 12% for those aged 90 and above. For example, a 78 year-old donor who established a charitable gift annuity of $20,000 secured with cash on December 20, 1999 and was the sole annuitant, would have an annuity rate of 9.1% and would receive annual income of $1,820 from her annuity investment for the remainder of her life.
Most charities establish a minimum amount and age for establishing a charitable gift annuity. The charity also negotiates a pay-out schedule with the donor, usually quarterly or annually. Cash is the asset typically used to establish a charitable gift annuity, but appreciated securities, including stocks, bonds and real property, can also be used. A donor should work with an attorney to calculate the tax deduction for a charitable gift annuity. The size of the deduction depends on such factors as:
- The value of the contributed asset;
- The age(s) of the donor(s); and
- The amount of the annual annuity interest.
The most important benefit of an APNM gift annuity is that it helps APNM work throughout New Mexico to accomplish its mission of promoting the humane treatment of animals and advancing the cause of animal rights.
For additional information, call (505) 264-5082. Thank you!