Charitable Gift Annuity
A charitable gift annuity is an agreement between you and Duke University. In exchange for your charitable gift, Duke agrees to pay you and/or your loved ones a fixed annuity for life. The size of the payment is determined at the time the gift is made and will not fluctuate with the market. Duke issues gift annuities in amounts of $10,000 and greater.
| Two Beneficiaries | One Beneficiary | ||||
| Your Ages | Payout Rate | Deduction on $100,000 gift | Your Age | Payout Rate |
Deduction on $100,000 gift |
| 67/65 | 5.4% | $25,591 | 65 | 5.7% | $34,546 |
| 70/68 | 5.6% | $28,497 | 70 | 6.1% | $39,880 |
| 75/70 | 5.8% | $32,631 | 75 | 6.7% | $44,840 |
| 80/75 | 6.2% | $39,194 | 80 | 7.6% | $49,611 |
| 80/80 | 6.6% | $42,018 | 85 | 8.9% | $54,085 |
| 85/80 | 6.9% | $44,857 | 87 | 9.5% | $56,134 |
| *Based on July 2008 I.R.S. discount rate of 4.2% | |||||
Donors who choose to defer income for a period of years can take a larger immediate income tax deduction and will receive a higher payout once payments begin. "Deferred payment" gift annuities and "flexible starting date" gift annuities can be great retirement planning tools for younger donors.
When you establish a gift annuity, you get to decide what program area at Duke the annuity assets will ultimately support. You receive an immediate income tax deduction for a portion of the gift, and this deduction can be spread over as many as six consecutive tax years. If your gift is funded with appreciated assets, you can also reduce your capital gains liability.
Duke also issues charitable remainder annuity trusts with gifts of $100,000 or more. Like a gift annuity, an annuity trust makes fixed payments; however, the tax treatment of an annuity trust differs. In general, a gift annuity will receive a more favorable tax treatment if you are making a gift with cash, and an annuity trust will receive a more favorable tax treatment if you are making a gift with highly appreciated assets. Duke's Office of Gift Planning can help you determine which gift vehicle is best for your particular situation.
Charitable gift annuities are not insured by any government agency but are backed by all of the assets of Duke University.
Examples
A) Example of a gift annuity
Mr. and Mrs. Blue, both age 70, donate $50,000 in cash to Duke to fund a gift annuity. For the duration of both of their lives, the annuity will provide them with fixed annual payments of $2,800. About $1,700 of this will be treated as tax-free income for the next 20½ years, with the rest treated as ordinary income. The Blues' current income tax deduction will be about $15,250, and the Blues have up to six years to use this deduction.
B) Example of a deferred payment gift annuity
Mrs. White, age 50, makes a gift of $50,000 of stock to fund a deferred payment gift annuity. At age 65, she will begin receiving annual payments of about $5,450, and she will continue to receive these payments for the duration of her life. She is also able to claim a current income tax deduction of about $21,380, which can be used over six years.
C) Example of a flexible starting date gift annuity
Mrs. Red, age 63, makes a cash gift of $100,000 to Duke to fund a flexible starting date gift annuity. She wants to defer income until she retires, but she's not certain when that will be. With this type of gift annuity, she can wait to decide when payments will begin. The longer she waits, the higher the payout rate. If she elects to have payments begin at age 66, her payout rate will be 6.4% and her annual payments will be about $6,400. If she waits until she turns 69, her rate will be 7.6% with annual payments of about $7,600. Mrs. Red's total charitable deduction will be about $40,925.