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Charitable Gift Annuities

Income for Life

You can establish a gift annuity by transferring cash or appreciated properties, such as stock, as an irrevocable gift to the San Angelo Area Foundation. The Foundation deposits these funds in a professionally managed account. Upon your death(s); the amount remaining in your gift annuity is distributed between the Discretionary Fund of the San Angelo Area Foundation, and endowments to the charities of your choosing, established at the San Angelo Area Foundation.

The San Angelo Area Foundation distributes a guaranteed, fixed payment to you for as long as you live. The amount you receive each year is determined by your ages; the older a donor is the higher payout he or she receives.

• Earn a charitable deduction the year the gift is made, even though the charity may not receive the proceeds for many years. (after the death of the annuitant(s)). Again, age determines the percentage of the gift which is considered as a charitable contribution. The older you are, the larger the deduction you earn.

• Receive guaranteed quarterly, semi-annual or annual payments, of which a large portion can be income tax-free.

• Enjoy the satisfaction of establishing legacy gifts for your favorite organizations and institutions.

• Appreciate the simplicity of the short, easy-to-understand agreement letter and the fact that establishing a gift annuity incurs no legal or other fees.

The American Council of Gift Annuities periodically revises recommended annuity rates and the San Angelo Area Foundation is pleased to illustrate specific details of a gift annuity of any amount. To request a customized illustration, please provide the following information:

1. Birth date or birth dates of donors.(up to two lives)
2. Estimated value of the funding asset. If it is stock, the cost basis is also needed.
3. Payment preference (quarterly, semi-annual or annual)
4. Income tax bracket.

Example of Charitable Gift Annuities at the
San Angelo Area Foundation

Annual rates of payouts and tax deductibility vary greatly with the age of the donor and the form in which a gift is made to establish the Charitable Gift Annuity.

JANE SMITH, AGE 80, has $100,000 in a certificate of deposit, currently earning 1.5 percent. She is interested in establishing an endowment to better her community and her favorite charity and she is interested in generating more income for herself at the same time. She enters into a gift annuity arrangement with the Foundation. In the first year, she gets a charitable deduction of $46,003 which can be spread over five years' tax returns. Thereafter, she is guaranteed a payout at 8 percent, or $8,000 per year for life. For the first nine years of annuity payments, $6,000 of that amount would be tax free. Assuming Jane's top tax bracket is 25 percent, the net return of her annuity would be 9.5 percent.

JIM JONES, AGE 67, gives the Foundation $100,000 from a certificate of deposit that was earning 2.5 percent and was going to renew at 2.1 percent. Mr. Jones wishes to create an endowed scholarship fund at the Foundation from the remainder of the annuity in order to fund scholarships in honor of his alma mater. Mr. Jones will receive an immediate tax deduction of $30,344. Payments of $6,200 or 6.2 percent would begin next year and continue for the rest of his life. Each year for the next 18 years, $3,893 of the $6,200 from the annuity would be tax-free. If Jim had renewed his C.D. at 2.1 percent, he would have earned $2,100. Assuming a 25 percent tax bracket, he would have paid $525 in taxes on his earnings. With the annuity, he has increased his after tax income by more than 8 fold! His net return is now over 7 percent and he is helping young people get a college education!

JAMES JOHNSON, AGE 58 and his wife MARY JOHNSON, AGE 57 both plan to retire in 10 years. They would like to contribute to an endowment for three different charities, but also want to help supplement their retirement income. They have $100,000 they would like to use in a deferred charitable gift annuity. By deferring payments for 10 years, they will receive $9,300 a year, or 9.3 percent a year for both of them. Again, they will receive an immediate tax deduction for a portion of their gift, which can be spread over a number of years and a portion of their annuity payments will be tax free. After both James and Mary have passed away, the remainder of the annuity can be distributed to the endowment funds they selected to support the charities they choose, forever!

These are only examples, and the exact circumstances of a gift can make big differences. It is also important to remember that the preferred tax treatment afforded for each of these examples is based on the fact that they are irrevocable gifts to a nonprofit entity. To discuss planned giving options and possible benefits, receive sample gift calculations or arrange a confidential consultation, please contact President and CEO, Matt Lewis at 325-947-7071.