A Charitable Gift Annuity: A Gift to Charity and Income to You
A charitable gift annuity is a simple and easy way to give to charity, and Nina Alexander should know. In fact, she was the first person to enter into such a contract with Children's Mercy when the hospital began its gift annuity program in 1996.
Having worked for Westport Bank in Kansas City for 15 years, Mrs. Alexander understood investments and was an astute manager of her personal assets. When she decided to support Children's Mercy, she knew she wanted to make a gift in exchange for a charitable gift annuity—and she waited for the program to be initiated at the hospital. She appreciated the fact that the annuity payments she would receive for the remainder of her life were substantially more than she earned from her CDs, and she also preferred the simplicity of a gift annuity over other forms of life income agreements.
Her support of the hospital through additional gift annuities has given Mrs. Alexander much pleasure over the past 10 years. She has enjoyed the security that gift annuities offer while achieving her philanthropic goals.
HOW A GIFT ANNUITY WORKS
A charitable gift annuity is a contract between the donor and the Children's Mercy Hospital Foundation under which the foundation guarantees payment of the annuity in return for donated cash or appreciated property from the donor. Simply put, in Nina Alexander's case, she donates assets to us and we reinvest. The foundation then makes fixed payments to Mrs. Alexander for life. After her lifetime, the funds are available for our use. She is making her assets work for her and Children's Mercy at the same time.
A WAY TO BOOST YOUR RATE OF RETURN
Donors like Mrs. Alexander are particularly attracted to the charitable gift annuity because the rates, based on the donor's age, typically produce higher yields than the stock and bond market. For senior persons, annuity rates may be as much as 11.3%. The higher rates combined with partially tax-free funds make this type of charitable support very attractive.
The benefits of a gift annuity include: 1) Lifetime payments for yourself and possibly another person; 2) Charitable deduction for a portion of the value of the gift; 3) Part of the annual payments is considered a tax-free return of capital; and 4) Capital gains tax savings when you contribute appreciated securities. Additionally, if the charitable deduction exceeds the maximum amount allowable, the remainder may be carried over for an additional five years.
Gift annuities are most attractive to senior persons, and our donors like Nina Alexander are secure in knowing that the annuity amount is fixed and will not change regardless of current investment or market conditions. And best of all, they, like Mrs. Alexander, are helping countless children by giving to Children's Mercy.