Charitable Gift Annuities

A charitable gift annuity is a gift that will provide you with income for the rest of your life and generously support the University.

Gift Annuity Basics

• A gift annuity is an irrevocable gift to the University of Virginia.
• A gift annuity may be established with a minimum of $5,000 and may be funded with cash, appreciated securities, or real estate.
• The minimum age to fund a gift annuity is 55 years of age.
• A gift annuity is a simple contract between you and the University of Virginia Foundation.
• Under this contract, you contribute assets to the Foundation, which in turn provides a guaranteed fixed income for life for one or two beneficiaries.
• The amount of the annuity payment depends upon the age of the individual receiving the income (or the combined age of two beneficiaries).
• You may claim a charitable income tax deduction in the year you make the gift for a portion of the gift annuity's value.
• If you fund your annuity with appreciated assets, a portion of your capital gains tax will be avoided and the remainder will be paid over time.
• A portion of the annuity income may be tax-free.

Don't need income now? Try a deferred gift annuity.

Deferred Gift Annuity Basics

• Similar requirements and benefits as a charitable gift annuity.
• There is no minimum age requirement for establishing a deferred gift annuity although you must be at least 55 years of age to receive income payments.
• You select a future "start" date (one year or later) to begin receiving income payments.
• You receive a larger immediate income tax deduction.
• You receive a larger annuity payment due to the delay in the start date.

How Does a Charitable Gift Annuity Work?

Mr. Taylor is 75 years old and wishes to support the University. He decides to fund a gift annuity with $25,000 in cash. The gift annuity rate for an individual his age is 6.3%, so Mr. Taylor will receive quarterly checks in the amount of $393.75 (or $1,575.00 annually) for the rest of his life in exchange for his $25,000 gift.

In addition to receiving regular fixed payments, Mr. Taylor will receive a portion of this income tax free. Mr. Taylor will also receive an immediate income tax charitable deduction of $11,358.25. When Mr. Taylor dies, the remainder of the annuity will support the University school or program designated in the contract he executed with the University of Virginia Foundation.

See Mr. Taylor's illustration.

Mr. Taylor wishes to include his 72-year-old wife in his gift annuity plan. Because there will be two individuals receiving income, the gift annuity rate will be 5.4%. The Taylors' quarterly payment will be $337.50 ($1,350.00 annually). A portion of this income payment will be tax free. When one beneficiary dies, the other will continue to receive the annuity payments.

See Mr. and Mrs. Taylor's illustration.

Ms. Pearce is 55 years old. In 2009, she received a $50,000 bonus from her employer. She is interested in establishing a gift annuity but doesn't need the income until she retires. Ms. Pearce decides to fund a gift annuity now but defer income payments until she is 65 years old. She will be able to claim an immediate income tax deduction of $18,730.00 on her 2009 federal tax form. In 2019, she will begin receiving quarterly income payments of $1,000.00 ($4,000.00 annually) for the remainder of her life. Because she deferred the payments for 10 years, Mrs. Pearce's gift annuity rate will be 8.0%.

See Ms. Pearce calculation.

Use our Gift Calculator to see how a gift annuity or deferred gift annuity can work for you.

The University of Virginia does not provide legal, tax or financial advice. We strongly recommend that you consult professional advisors on all legal, tax or financial matters, including gift planning considerations. To ensure compliance with certain IRS requirements, we disclose to you that this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding tax-related penalties.