Charitable Gift Annuities
A charitable gift annuity (CGA) is a simple agreement between the donor and the National Gallery of Art. In exchange for an irrevocable gift of at least $10,000, the Gallery agrees to pay the donor or other individual(s) whom the donor names, an annual fixed income for life—a fixed percentage of the original gift value, which is based on the age(s) of the annuitant(s). (See table for all rates, based on age). The remainder becomes available to the Gallery for its use at the death of the annuitant(s). A gift annuity can be established with a contribution of cash or securities; income beneficiaries must be at least sixty years old. Gift annuities are administered at no cost to the donor. A donor who establishes a gift annuity receives an immediate income tax deduction for the gift portion of the original principal minus the value of the income payments to be made to the annuitant(s). If a CGA is created with appreciated securities, the capital gains taxes due will be deferred and, in some cases, reduced.
The annuity payments are guaranteed and backed by the full, unrestricted assets of the Gallery. Part of the annuity may be income tax free, increasing overall return. The gift annuity may be set up over a period of one or two lifetimes—one of which is often the donor’s.
Benefits of Establishing a Charitable Gift Annuity at the Gallery:
- Provides for the future of the Gallery
- Establishes an important legacy for donors and/or their family
- Sets up a lifetime income stream at an attractive rate of return
- Offers the possibility of tax-free income*
- Allows for a charitable income tax deduction, and deferral and/or reduction of capital gains tax
- Transforms non-income or low-income generating assets into a potentially higher income stream
*A portion of the income you receive from the charitable gift annuity usually is a tax-free return of principal.
Deferred Gift Annuities
A deferred gift annuity is similar to a CGA, except that the annuity payments do not begin until a specified future date, chosen by the donor, which must be more than one year after the date of the contribution. Because the payments are deferred, the donor, or other individual(s) whom the donor names, receives a higher annuity rate as well as a higher immediate income tax deduction.
This type of annuity can also be an attractive supplement to the donor’s retirement income. If a donor has reached the limit of allowable contributions to an IRA account, Keogh plan, or other qualified pension plan, the deferred gift annuity can be an attractive tax-deductible source of guaranteed retirement income.
We invite you to contact us with questions or comments about planned giving; we would welcome the opportunity to discuss these options further with you. We highly recommend that you also speak to a financial adviser.