For those who wish to contribute assets to the agency while retaining the income those assets generate, the Achievement Centers offers a variety of life-income gift options. In exchange for an irrevocable transfer of funds or property to the agency, a donor may retain an attractive income for his or her lifetime -- and for that of a loved one if desired. Such gifts may take the form of gift annuities, charitable trusts, or pooled income fund contributions. All these arrangements generate significant income- and estate-tax savings, and the income paid to the donor can often exceed the current rate of return available from the contributed assets. In addition, capital gains taxes on the appreciated portion of stocks or other property can be reduced, avoided, or postponed by such strategies.

For more information, call the Development Office at 216-292-9700 for a confidential, no-obligation discussion of your particular situation.

CHARITABLE GIFT ANNUITIES

What is a Charitable Gift Annuity?

A charitable gift annuity is a way to make a gift to the Achievement Centers, and still receive an income for yourself or others. It is a contract under which a charity, in return for a transfer of cash or other property, agrees to pay a fixed sum of money for a period measured by one or two lives. The person who contributes an asset for the annuity is called the "donor", and the person who receives payments is called the "annuitant" or "beneficiary." Usually, the annuitant is also the donor, but this is not always true. The maximum number of annuitants is two, and payments can be made to them jointly or successively.

Charitable Gift Annuity Payments

Payments from a charitable gift annuity are fixed from the outset. They will neither increase nor decrease, whatever happens to interest rates or the stock market. A charity is contractually obligated to make the payments, even if it has to dip into its general funds to do so.

Factors Affecting the Size of Payments

The size of the payments from a charitable gift annuity depends on the following factors:

• The gift annuity rate offered by the charity (most charities follow rates recommended by the American Council on Gift Annuities).
• The value of the contribution.
• The number of annuitants.
• The age(s) of the annuitant(s).

Gift Annuity Rates

Since 1927, the American Council on Gift Annuities (ACGA) has periodically published a schedule of suggested charitable gift annuity rates. Although a charity is free to offer any schedule of rates it wishes the Achievement Centers for Children follows the rates suggested by the ACGA. Thus, donors generally find that the rates offered by various charities are identical. This encourages donors to make philanthropic decisions based on the cause of the charities they consider supporting, rather than the rates offered.

Charitable gift annuity rates are lower than those offered by insurance companies to purchasers of commercial annuities so that a significant portion of a contribution will be available for charitable purposes. Though lower than commercial rates, gift annuities are still very attractive to individuals who want simultaneously to support a favorite charity and provide payments to themselves or others.

Click here to see the charitable gift annuity rates recommended by the American Council on Gift Annuities.

Persons Who Might Benefit From a Gift Annuity

Most gift annuity donors are retired, want to increase their cash flow, seek the security of guaranteed payments, and would like to save taxes. A charitable gift annuity could be right for people in any of the following circumstances:

The interest rates on their CDs and other fixed-income investments have declined, and they would like to increase their cash flow.

They own appreciated stock or mutual fund shares and have considered selling some of the shares and reinvesting the proceeds to generate more income, but they have hesitated because they don't want to pay tax on the capital gain.

They would like to count on fixed payments, which are unaffected by interest rates and stock prices and which they cannot outlive.

They want to assure continuation of payments to a surviving spouse without the delay of probate proceedings.

They would like to provide financial assistance to an elderly parent, a sibling, or other person in a tax-advantaged manner.

Taxation of Gift Annuity Payments

If the gift annuity is funded with cash, part of the payments will be taxed as ordinary income and part will be tax-free. If funded with appreciated securities or real estate owned more than one year, and the donor is receiving the annuity payments, part of the payments will be taxed as ordinary income, part as capital gain, and part may be tax-free. Achievement Centers for Children will send a Form 1099-R to the annuitant at the end of each tax year. This form will specify how the payments should be reported for income tax purposes. For details regarding the taxation of gift annuity payments, it is wise to consult with our staff as well as your financial advisors before deciding if a Charitable Gift Annuity is right for you.

Income Tax Charitable Deduction

Taxpayers who itemize deductions can claim a charitable deduction for a portion of the original gift. This deduction can result in significant income tax savings. In short, the deduction is equal to the amount of the contribution less the present value of the payments that will be made to the donor and/or other beneficiary during life. The present value of those payments is determined using IRS tables regarding life expectancy and assumed earnings, and taking into consideration the amount contributed and the gift annuity rate.

If you are considering a gift annuity our staff can provide you with accurate tax calculations for the gift that you are considering. For more information, call the Development Office at 216-292-9700 for a confidential, no-obligation discussion of your particular situation.

CHARITABLE REMAINDER TRUSTS

With a charitable remainder trust, you can be paid the income from the trust assets for the rest of your life. The year you establish the trust, you receive a charitable deduction for the portion expected to remain for us after your lifetime. Plus, the trust assets will be removed from your taxable estate, so they're not subject to estate tax.

For more information, call the Development Office at 216-292-9700 for a confidential, no-obligation discussion of your particular situation.