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A Charitable Gift Annuity is a simple contract between you and Clark University. In exchange for an irrevocable gift of a specified amount, Clark agrees to make fixed annual payments for life to one or two persons (annuitants).
If you are married, it can pay either you alone or you and your spouse jointly and then the survivor. You can also create a gift annuity with payments to someone other than a spouse.
Payments may be made annually, semiannually or quarterly. Unless another option is chosen, we generally make distribution at the end of each quarter (December, March, June and September).
The fixed dollar amount to be paid to the annuitant(s) is determined by the value of the gift and the age(s) of the annuitant(s). All charitable organizations are free to set the rates they offer, as long as the rates comply with any applicable state regulations. Normally, the rates are recommended by the American Council of Gift Annuities. The recommended rates change from time to time, based on a variety of economic factors (any changes would affect only newly issued annuities).
The charitable deduction is equal to the difference between the amount of the gift and the value of the payments to the annuitants. Deductions are lower for younger people since they are likely to live longer. Similarly, deductions are lower when there are two annuitants rather than one. The deduction is also affected slightly by both a federal discount rate that changes from month to month and the frequency of payments.
For tax purposes, a gift annuity contribution is treated as part gift and part purchase of an annuity. The gift part is the amount that is deductible the year you create the gift annuity. The balance is deemed to be the purchase price for the annuity. Part of the payments are treated as a return of your original ģinvestmentē and comes back to you tax-free over your life expectancy.