Many donors favor charitable gift annuities, which offer a simple way to make a gift and receive payments for life in return. In exchange for your charitable gift of cash, securities or other assets. Pacific Northwest Ballet provides fixed payments for life to one or two persons. The size of the payments depends on the size of the contribution and the age of the person(s) receiving the annuity. If you are married, you may choose a two-life annuity that continues as long as either spouse lives. It is also possible to provide a lifetime annuity for someone other than yourself or your spousea parent or sibling, for example. Payments can begin immediately or be deferred to a later date.
The minimum amount to establish a gift annuity is $10,000, and the person receiving the annuity must be at least 60 years old when the payments begin. At the last beneficiary's death, the assets become available to Pacific Northwest Ballet, to be used according to your recommendations. This arrangement features many benefits to consider:
- Provides you and/or another beneficiary a specified amount annually for life
- Provides an immediate income tax deduction for a portion of the value of the assets transferred
- If long-term appreciated property is contributed, tax on capital gain is reduced
- Almost always, a portion of the payments will be received tax-free
- Frequently provides greater cash flow than investments such as certificates of deposit
- Can provide supplemental cash flow for retirement
- May provide estate tax savings
Planned Giving at Work
Ms. A, age 76, establishes a Charitable Gift Annuity at Pacific Northwest Ballet with $10,000 cash and receives lifetime payments of $600 annually, of which $479 is tax-free for the first 11 years. She also receives an income tax deduction of $4,351. The portion of her contribution remaining at the end of her lifetime will be added to PNB's Endowment fund, as she wants her gift to benefit PNB in perpetuity.
Mr. and Mrs. B, ages 72 and 71, contribute stock valued at $40,000 for which they paid $10,000 some years ago. The stock's current dividend is 2%, or $800 per year. The annual lifetime payments from the annuity will be $1,880, more than twice what they are now receiving in dividends, and $366 of each payment will be received free of income tax for nearly two decades. Almost $10,000 in capital gains will be forgiven entirely, with the remaining gain spread over their combined lifetime of 19 years. Another benefit is an income tax deduction of $11,757 they can claim in the year that they make their gift.
(Examples use a discount rate of 1.6%)
We would be pleased to prepare an illustration showing how a charitable gift annuity would work in your situation. There is no cost or obligation, and all information will be kept confidential. For an illustration or more information, please contact Katie Johnson, Major Gift and Planned Giving Manager, at 206.441.3599 or firstname.lastname@example.org.