Make
A Gift. Earn Income for Life.
The SOCH Foundation Charitable Gift Annuity
Program
The SOCH Foundation's Charitable Gift Annuity (CGA) Program enables you to make a significant gift to the Hospital and receive income for you and your spouse over your lifetimes. It offers you an alternative to direct contributions.
A charitable gift annuity (CGA) is a contract under which a charitable organization, in exchange for a transfer of cash, marketable securities, or other property; agrees to pay a fixed sum of money for a period measured by one or two lives. The person transferring the property for the annuity is the "donor," and the person receiving the fixed payments is the "annuitant" or "beneficiary." Usually the annuitant is also the donor and/or donor's spouse.
In many cases, the property exchanged for the annuity is appreciated property that could generate taxable gain if it were sold outright. However, if the transaction is properly structured, any taxable gain will be deferred over the annuity period. In addition, the donor will be entitled to a current income tax charitable deduction for the excess of the fair market value of the property transferred over the fair market value of the annuity at the time of transfer.
The contributed property (gift) is given to the charity irrevocably, and becomes part of the charity's assets. The annuity is backed by the charity's assets, and the charity is contractually obligated to make the payments. The annuity payments continue for the life/lives of the annuitant(s).
Payments from a charitable gift annuity are fixed for the annuitant's life at the time of the gift. Payments neither increase nor decrease due to economic or market conditions. The amount of the annuity payments depends on the gift annuity rate offered by the charity, the value of the contribution (gift), number of annuitants, and life expectancy of the annuitants.
The gift annuity rates for 2009, as suggested by the American Council on Gift Annuities, range from 5.0% for age 60 to between 7.1% and 9.5% for a donor age 80 or more. Because the gift annuity rates are based on your age, the older you are, the higher the rate. Charitable gift annuity rates are lower than commercial annuities so that a significant portion of the contribution will be available for charitable purposes. Though lower than commercial rates, gift annuities are very attractive to individuals who want to support their favorite charity while receiving payments for themselves at the same time.
Illustration #1:
Joan Simpson, age 66, makes a gift to the SOCH CGA of $50,000. Based
on her life expectancy and an annuity rate of 5.4%, she would receive
fixed payments of $2,700 each year for as long as she lives, and would
receive an income tax charitable deduction of $16,960 at the time of
the gift.
Illustration #2:
John Davis, age 79, has a bank certificate of deposit in the amount of
$75,000 that matured. Rather than roll the CD over at the bank at 3.5%
for 12 months, he has decided to contribute the money to a SOCH CGA.
Based on John's life expectancy and an annuity rate of 6.9%, he will
receive fixed payments of $5,175 per year for his lifetime, and would
have an income tax charitable deduction of $37,301.
Illustration #3:
Benjamin Smith, age 68, and his wife Sarah, age 66 wish to make a $75,000
gift to the SOCH CGA. Based on their joint life expectancies
and an annuity rate of 5%, the Smith's would receive payments of $3,750
per year for as long as either of them lives, and would have an income
tax charitable deduction of $19,882.
The SOCH CGA provides you with the opportunity to support the Hospital with your generous gift, receive a guaranteed fixed income for the rest of your life, and take advantage of a potentially significant charitable tax deduction for a portion of the contribution.
This information is intended to present the general concepts and applications of the Charitable Gift Annuity, and should not be considered specific investment, tax, or legal advice. It is important that you consult with your personal tax, legal, or investment advisors to fully explore the appropriateness of the CGA for your specific situation.
This article was prepared by Deborah R. Mathis, CPA, CHBC, Director of the Healthcare Services Group of Cowan, Gunteski & Co., P.A; and Chair of the SOCH Foundation’s Planned Giving Committee, a volunteer group of the area’s leading financial professionals, lending their time and expertise to advance the charitable mission of Southern Ocean County Hospital. As always, we recommend contacting your personal financial advisor. To learn more about charitable estate planning, and special recognition granted through the Knight Society, contact SOCH Foundation Executive Director Chris Rollins, CFRE, at (609) 978-3081, or click here to contact us.
About the Author
Deborah R. Mathis, CPA, CHBC, is a Shareholder/Director with the Healthcare
Services Group of Cowan, Gunteski & Co., P.A. As a Certified Healthcare
Business Consultant (CHBC), Ms. Mathis is uniquely qualified in both
the financial and operational facets of medical practices. She is recognized
in the healthcare industry as a consultant with a proven track record
of helping physicians keep more of their hard-earned money. Her areas
of expertise include revenue enhancement strategies, practice vital
signs, compensation formulas, physician buy-sell agreements and practice
valuations. Ms. Mathis serves on the Board of Trustees of the Southern
Ocean County Hospital (SOCH) Foundation. She can be contacted at 732-349-6880
ext. 114 or dmathis@cowangunteski.com.
About Cowan, Gunteski & Practice, P.A.
As a diversified certified public accounting firm, Cowan, Gunteski & Co.,
P.A. is committed to being an active partner in its client’s growth
by delivering consistent exceptional service, value beyond accounting
and innovative solutions. Visit www.cowangunteski.com for
more information on the services available to meet your unique needs.
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