A charitable gift annuity is a simple way for donors to make a gift with some attractive benefits. A donor makes a gift of cash or publicly traded securities, and in exchange the University of Minnesota Foundation agrees to pay the donor, or others the donor has designated, a fixed amount annually for life, with the payments guaranteed by the foundation. At the termination of the gift annuity, the remaining assets support the campus, college, or program the donor has designated.
Important update: the American Council on Gift Annuities (ACGA) announced a decrease in the recommended gift annuity payout rates beginning July 1, 2020. While UMF generally follows the ACGA recommended rates, the foundation will continue to offer the current, higher rates for any gift annuity created on or before September 30, 2020.
Creating a charitable gift annuity
- The minimum gift is $10,000, and the minimum age when payments may begin is 55.
- Gift annuities may be funded with cash or securities.
- Donors may receive an immediate income tax deduction for a portion of the gift.
- Once the gift annuity is established, it pays a fixed sum annually to one or two people for life based on the amount of the gift and their ages at the time the annuity begins. Payments can be made monthly, quarterly, semi-annually, or annually.
- A charitable gift annuity agreement is irrevocable.
Note: Gift annuities also may be established for others as a lifetime gift or as a testamentary gift through a will or living trust.
Benefits of a gift annuity
- The donor and/or designee(s) will receive an income supplement for life at attractive payout rates.
- A portion of the charitable gift may be tax deductible.
- A portion of the annual payments will be tax free.
- Individuals who donate long-term appreciated securities may get capital gains tax savings.
- Gifts can be designated to a specific campus, college, or program, or where the need is greatest at the University.
Deferred charitable gift annuity
If a donor does not need additional income immediately or would like to set up an annuity for a younger person, the donor may consider a deferred payment gift annuity. Because payments do not begin until a minimum deferral period of at least one year, a deferred gift annuity offers higher payment rates and typically a greater tax deduction than an immediate payment charitable gift annuity.
The University of Minnesota Foundation generally follows the rates recommended by the ACGA. Gift annuity rates are determined by the annuitant’s age at the time payments begin, and take into account the current investment climate.
Information on this website is not intended as legal or tax advice. For information on how any gift may affect your tax situation, please consult with your own professional advisor.