A Tax-Smart Giving Strategy
Creating a Charitable Gift Annuity using long-term appreciated property — such as stocks, mutual funds, or real estate — can be an excellent way to support Benedictine Foundation while securing fixed payments for life. In addition to these benefits, this approach offers unique tax advantages that may reduce your capital gains tax burden.
What is a Charitable Gift Annuity?
A Charitable Gift Annuity is a simple contract between you and Benedictine Foundation. You donate long-term appreciated property, and in return, Benedictine Foundation agrees to make fixed payments to you for life. Your payment amount is determined by your age at the time of the gift and does not change over your lifetime, providing reliable income regardless of market fluctuations.
Why Fund a Charitable Gift Annuity with Long-Term Appreciated Property?
While you can use cash to fund a Charitable Gift Annuity, using long-term appreciated property can provide you with additional tax benefits. Here’s why it’s advantageous to consider funding a Charitable Gift Annuity with long-term appreciated property:
- Reduced Capital Gains Taxes: You recognize only a portion of your capital gain in the appreciated securities. What’s more, in most cases you can spread payment of the capital gains tax you do owe over many years. If you were to sell the appreciated securities yourself, you would owe capital gains taxes on all the appreciation in the year of sale.
- Income Tax Deduction: You are eligible for an income tax charitable deduction based on the fair market value of the property you give, subject to IRS limitations. This deduction can reduce your taxable income in the year of your gift. You may carry forward any unused deduction for up to five additional years.
- Lifetime Income: You receive fixed payments for life, based on the value of your gift and your age at the time of the gift. In addition, your payments are partially tax-free for many years. This stable payment stream can be particularly appealing if you are looking to supplement retirement income.
- Diversification: Donating appreciated securities to fund a CGA can serve as a diversification strategy, allowing you to reduce concentrated holdings in your investment portfolio without incurring immediate capital gains taxes.
- Charitable Impact: After the annuity payments conclude, the remaining funds support Benedictine Foundation’s mission, making a lasting impact.
Consult with Your Advisors
A Charitable Gift Annuity funded with appreciated property is a powerful way to secure fixed payments for life and tax benefits while supporting the values and work of Benedictine Foundation.
Before you fund a Charitable Gift Annuity, however, we encourage you to speak with your financial and tax advisors to evaluate how it fits within your overall financial plan.
If you would like to explore establishing a CGA with appreciated property or other assets, please contact us. We can provide you with information tailored to your needs, including the current annuity rates, potential tax benefits, and the long-term impact of your gift.
Thank you for considering a generous gift to help sustain Benedictine Foundation.