Charitable Gift Annuity: FAQs

How can I calculate my benefits?
Try our gift calculator! It’s fun and educational.
How are the annuity payments secured?
A gift annuity contract becomes a legal financial obligation of the Dechomai Foundation and is backed by all of our unrestricted assets.
Is it better to give cash or appreciated securities for my gift annuity?
Both have distinct advantages. A gift of cash will produce a larger tax-free portion of the annuity. A gift of stock can increase your income because of reduced capital gains cost. Both assets produce an equal annuity rate and charitable income tax deduction.
Can I include my children as income beneficiaries of my gift annuity?
A charitable gift annuity can only be set up for one or two lives. This is typically a husband and wife, but it could be two siblings or two friends, etc. Beneficiaries must be at least 55 at the time of the gift.
What’s the difference between a commercial annuity and a charitable gift annuity?
A commercial annuity, typically sold by banks and life insurance companies, will provide the owner with fixed or variable income based on commercial rates of return. These plans establish their annuity payments based on the assumption that all of the assets in the plan will be used up by the end of the income beneficiaries’ lives.A charitable gift annuity is part guaranteed annuity and part charitable contribution. The donor receives a partial income tax deduction based on the assumed value of the portion of the gift the organization will ultimately receive. A gift annuity establishes its payments on the assumption that there will be something left for the organization at the end of the contract. Often annuity rates for gift annuities cannot compete with the annuity rates of a commercial annuity because of the charitable component in the contracts. But then, there are fewer tax benefits with a commercial annuity.
Can I defer my annuity payments?
Yes, you can make a gift now for an annuity contract that will defer your payments to a future date that you decide, typically sometime in your retirement years when you will need the income. In this sense, a deferred payment gift annuity can serve as a type of tax-deferred savings plan that will provide you with guaranteed income in the future.

Deferred Gift Annuity: FAQs

How can this gift enhance my retirement savings?
A Deferred Gift Annuity provides lifetime annuity payments commencing at a future date.  Because of this deferral, payments from deferred gift annuities are higher than from annuities whose payments begin immediately, and donors usually receive a larger charitable deduction than they would for an immediate-payment annuity.  Many donors use deferred gift annuities as a source of supplemental retirement income.  They often create their annuity with funds they had already set aside for retirement savings, and set their anticipated retirement as the date to begin receiving payments.  An attractive option is to establish a series of deferred gift annuities over several years, all scheduled to begin payments upon the donor’s retirement.
May I choose the start date for my annuity payments?
Yes, you may. Choose whatever date makes sense to you. And remember this: the longer you wait, the larger your payments will be.
Is it better to use gifts of cash or stock for my deferred gift annuity?
One is not necessarily better than the other. Both have distinct advantages. A gift of cash will produce a larger tax-free portion of the annuity. A gift of stock will reduce the donor’s capital gain tax. Both assets produce an equal annuity rate and charitable income tax deduction.

Flexible-Deferred Gift Annuity: FAQs

How long can my deferral 'window' be?
With the flexible start date option, you can set any number of years as a window to begin receiving payments. Then you can wait to choose your payment start date until you’re ready. The longer you defer payments, the higher the payments will be.
How will my annuity rate be determined?
Like most charities, the Dechomai Foundation offers the maximum charitable gift annuity rates recommended by the American Council on Gift Annuities (ACGA).We will be happy to provide information and calculations based on various “window” start dates for your Flexible Gift Annuity. You can also perform calculations for yourself on our Flexible Gift Annuity Calculator.
How is my income tax charitable deduction calculated and when do I claim it?
Your income tax charitable deduction will be based upon the first year in the window you can start to receive payments.For example, if your deferral window is anywhere from 5 to 15 years from now, your income tax deduction will be calculated based on the assumption that you start taking payments in year 5, even if you actually wait until year 15 to do so.You will claim your income tax charitable deduction in the year you create the gift annuity.
How will my payments be taxed?
Just as with Immediate and Deferred Gift Annuities, payments from Flexible Gift Annuities are taxed based upon the assets used to fund the gift annuity. If you fund your gift with cash, a portion of each payment will be taxed at ordinary income tax rates and a portion is tax-free return of principal. However, if you fund your gift annuity with appreciated stock, a portion of each payment is taxed as ordinary income, a portion is taxed as capital gain, and a portion is tax-free return of principal.We can assist in determining the taxation for any particular gift.
Can I include my children as income beneficiaries of my Flexible Gift Annuity?
A Flexible Gift Annuity can benefit a maximum of two beneficiaries. Often, the donor and her spouse are the beneficiaries, but you could also name children, parents, or friends as annuitants.Note that naming beneficiaries other than a spouse will raise gift tax considerations and cause immediate recognition of capital gain on appreciated property.For more flexible beneficiary options, you can explore Charitable Remainder Trust options.
Can I choose the start date for my annuity payments?
Yes, you may. In fact, you must elect a specific start date in the defined window if you wish to begin receiving payments before the end of the window. You can choose whatever date makes sense, as long as it is at least one year from the date the Flexible Gift Annuity is created. And remember: the longer you defer payments, the larger your payments will be.
Is it better to use gifts of cash or stock for a Flexible Gift Annuity?
One is not necessarily better than the other. Both have distinct advantages.A gift of cash will produce a larger tax-free portion of the annuity and be deductible against a larger percentage of your adjusted gross income, but you will avoid a portion of capital gain on appreciated stock used to fund the annuity (and defer the rest).Your charitable deduction and annuity rate are not affected by the type of asset used to fund the gift.