Charitable Gift Annuities
Remove doubts … Receive a guaranteed income

The Dilemma

You either need or desire more annual income, but you are not comfortable with taking the risk associated with “investing.” Bank savings accounts and certificates of deposit are “safe,” but the rates of return are insufficient to provide the cash flow that you desire.

The Solution

Transfer money or securities to Emmanuel School of Religion as part of an agreement that guarantees you a fixed income for life. In addition, you will receive a tax deduction and avoid paying taxes on a significant portion of the annuity income. The principal, which funds the charitable gift annuity, becomes the property of Emmanuel School of Religion, but regardless of what happens to the value of the principal, you receive a fixed income for life.

Let’s Be Specific

Mrs. Smith, age 79, has $50,000 in certificates of deposit whose rate of return is not providing sufficient income to meet her expenses. She transfers the $50,000 to Emmanuel School of Religion, who in return provides her a 7.8% fixed-for-life income. While she receives $4500 per year for life, $2330 of that amount is excluded from taxes … and she receives a charitable tax deduction of $28,736 in the year of the gift.*

Mr. Jones, 75, has invested in the stock market for years. He has enjoyed the adventure of creating a large stock portfolio, but now needs income in his retirement years. Unfortunately, stock dividends amount to only a 2–3% return … and he needs more cash. Mr. Jones establishes a charitable gift annuity using $100,000 of his stocks. He receives $8200 per year for life, but pays income tax on only $2377 … and receives a charitable deduction of $57,723 in the year of the gift. Because the annuity is created with stock, there is some capital gains tax, but it is greatly reduced and is paid over the donor’s lifetime instead of in a lump sum payment. Since the cost basis of Mr. Jones’ stock was $30,000, the estimated annual 20% capital gains tax would be $1120, payable over 12.5 years as opposed to a lump sum payment of $14,000.*

* All figures provided in January 2007.

A Service to You

If you would like to know the specifics about your situation, provide us your birth date and the amount of the annuity you would like to establish. We then can give you specific information in regard to how a charitable gift annuity would work for you.

Some Questions You May Have

How is the rate of return determined?

The rate of return is based on your age at the time the annuity is established. Annuity ages are determined by your closest birthday. The rate of return, and thus the annual payments, does not change with your age. Contact Emmanuel School of Religion to determine your rate of return.

What determines the charitable deduction?

The charitable deduction is determined by your age, the percentage payment to you and the fair market value of the property used to fund the annuity.

Does a joint annuity pay the same rate of return as a single life annuity?

Joint life annuities pay less because payments must be made over two lifetimes. Contact Emmanuel School of Religion for sample joint life rates of return.

Can the annuity be used to provide income for someone else?

Yes, you many include a spouse, parent, child or friend as co-recipient of the income. This is referred to as a two-life or joint annuity. When one of the recipients dies, the other receives the amount that was being divided between them.

If there are capital gains taxes to be paid by funding with stocks, what’s my advantage?

If a charitable gift annuity is funded with appreciated securities, there are capital gains taxes to be paid, but they are greatly reduced and payable over the annuitant’s lifetime instead of in one lump sum payment. See the Mr. Jones example.

Are there any other tax advantages to a charitable gift annuity?

Yes, several. A portion of each annuity payment you receive is tax-free. The amount varies with your age at the time you establish the annuity and with the amount of the annuity. Also, charitable gift annuities for one person, or for two persons if they are spouses, are not subject to federal estate taxes.

Is there a minimum amount to establish an annuity with Emmanuel School of Religion?

Yes, regardless of your age, the minimum amount to establish an annuity with Emmanuel School of Religion is $5,000.

If you have questions about establishing a charitable gift annuity, please contact

Dan R. Lawson, Executive Director of Development
Emmanuel School of Religion
One Walker Drive
Johnson City TN 37601
(423) 461-1530
Email: lawsond@esr.edu

The purpose of this site is to provide information of a general nature. Emmanuel School of Religion or its associates are not engaged in giving legal or tax advice. Individuals should seek the advice of their attorneys and tax advisors for specific tax implications and laws governing estate planning and charitable gifts.