Charitable Gift Annuity

Creating a charitable gift annuity is a wonderful way to support the University in the future—while supporting yourself today. A charitable gift annuity is a contract with the University specifying that, in return for your irrevocable gift, Columbia will pay you and/or another beneficiary a fixed income for life. When all income beneficiaries die, Columbia will use the remainder of your gift for the purpose you request. In addition to favorable rates of return, charitable gift annuities also afford donors many tax benefits.

How Much Income Will I Receive?

Like most charitable organizations, Columbia uses rates set by the American Council on Gift Annuities. These rates are based solely on the age of the income beneficiary or beneficiaries at the time of the gift.

Sample Rates

For example, in return for a transfer of $50,000, a 65-year-old will receive $3,000 each year for life ($50,000 x 6 percent). This amount will never change.

Is this income guaranteed?

Yes. Payments to you are a general obligation of Columbia and backed by the University’s endowment.

Is there a minimum gift amount?

The minimum contribution to establish a gift annuity at Columbia is $25,000.

What assets can I use to fund a charitable gift annuity?

Most people use cash or appreciated securities to fund a gift annuity.

How will I receive my income?

Columbia usually pays its beneficiaries on a quarterly basis and deposits income directly into a bank account.

How will my income be taxed?

Annuity payments are treated as a combination of ordinary, capital gain, and tax-free income. The details depend on your age and what you use to fund the charitable gift annuity. Our Gift Planning officers will be happy to discuss specific examples with you.

If you use cash, a large portion of your income will be subject to no income tax at all for a fixed number of years, depending on your age. The balance will be taxed at ordinary income rates. If you use appreciated securities, a part of the tax-free portion of the payment is replaced by income taxed at capital gains rates. Each year, you will receive a Form 1099 that tells you how to report the income on your tax return.

Will I receive a current income tax deduction when I create a charitable gift annuity?

Yes. You will be able to deduct an amount equal to 40 to 60 percent of the assets you transfer to Columbia. The exact amount depends on a number of factors, including your age and the annuity rate.

Will I have to pay capital gains taxes if I use appreciated securities to fund an annuity?

No. You will not have to pay tax on capital gain, but some of the annuity payment will be taxed at capital gains tax rates. Choosing appreciated securities as your funding assets allows you to spread out your capital gains tax liability over your life expectancy while converting a highly appreciated, low-yielding asset into an attractive fixed-income stream (The rules are slightly different if you create a gift annuity for another person.)

Are gift annuities good for everybody?

Not necessarily. If you are younger than 65, inflation may erode the value of fixed income payments over time. While fixed income is guaranteed to the beneficiary or beneficiaries for the rest of your life, younger donors should balance fixed income with investments that can grow.

I am under 65. Are there charitable gift annuities that are right for me?

Yes. A deferred gift annuity might be particularly interesting to you. If you agree to postpone receipt of your income, you will receive an even higher rate of income. The deferral of the annuity payment also increases the income tax deduction you can take in the year that the annuity is established.

CURRENT AGE	DEFERRAL	ANNUITY RATE
50	15 years	12.3 percent
55	10 years	9.7 percent
60	5 years	7.6 percent

Can a deferred gift annuity supplement my retirement income?

Many working people find themselves wanting to set aside more than they are allowed to contribute tax-free to retirement plans such as IRAs and 401(k) plans. When you establish a deferred gift annuity, you create an additional source of guaranteed retirement income.

What will Columbia do with my gift?

While the income beneficiaries are alive, Columbia will invest the gift assets in a pool of investments, which is where the annual payments to beneficiaries will come from. After the beneficiaries die, the remaining assets attributed to the original gift will be removed from the pool and used by the University for the purpose you choose.

Charitable gift annuities have been used, for example, to support student financial aid, faculty research or library acquisitions. The Office of Gift Planning will help you direct your gift to support a program at Columbia that is particularly meaningful to you.

Examples

Joe is 72, and he had $50,000 invested in a money market fund. In August 2006, he sent a check to Columbia for $50,000, and the University agreed to pay a 7.6 percent annuity — or $3,350 — to him each year for the rest of his life. Of that income, for 14.5 years, $1,866 is tax-free. Joe is taxed only on the remaining $1,484. He also receives an income tax deduction of $22,960. Elaine, age 80, holds stock worth $100,000, which she purchased years ago for $10,000. The stock pays a dividend of only 2 percent, or about $2,000 per year. Columbia would pay Elaine an 8 percent annuity. Of the $8,000 annual payment, for 9.4 years, $4,600 would be taxed as capital gain, $2,888 would be taxed as ordinary income, and $512 would be tax-free income. She would receive a tax deduction of $51,929.

For More Information

If you are considering a charitable gift annuity, e-mail us, complete the Personal Illustration form, or call us at
800-338-3294 so that we can assist you.

PLEASE NOTE: Gifts of appreciated securities and other property must have been held by the donor for one year in order to receive a full fair market value tax deduction.