When most people consider charitable giving, they aren’t thinking of their own benefit. But there are gifts that can help you and Cal Poly. Deferred charitable gift annuities (DCGA) are an excellent way to help Cal Poly continue to do our work and can ensure a more secure financial future as you prepare for retirement.
You make a contribution of cash or appreciated property owned longer than one year to Cal Poly. We agree to make fixed payments to you for the rest of your life starting at any date you select — beginning at least one year from the date of the gift.
The payment rate is based on a combination of the recipient’s age when payments begin and the length of time between the creation of the annuity to the first payment. The older the annuitant (recipient of the DCGA payments) when payments begin and the longer the deferral, the higher the rate of the annual payments.
Casey, 60, gives Cal Poly $40,000 in appreciated stock owned longer than one year in exchange for a deferred gift annuity that will begin making payments 5 years from now. The cost basis in the stock is $10,000. Using the suggested rates, Casey’s deferred annuity will pay at an annual rate of 6.7%, or $2,680. Casey’s federal income tax charitable deduction will be approximately $18,884.* If Casey is in the 32% income tax bracket, this charitable deduction will result in a tax savings of $6,043.
In the chart you will see rates recommended by the American Council on Gift Annuities, which most organizations follow. Check with our representative for current rates and applicable ages for deferred charitable gift annuity eligibility according to our most current policies.
*Based on a 5.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.
|Sample Deferred Gift Annuity Rates for One Person|
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If you itemize your tax returns, you can receive a federal income tax charitable deduction. The deduction is equal to the difference between the fair market value of the property or the amount of cash given to Cal Poly and the value of your deferred charitable gift annuity payments.
If you fund the DCGA with appreciated property that you have owned longer than one year, you are not responsible for the capital gains tax at the time of your gift. Instead, a portion of your payments will be taxed as capital gain (provided that you are the primary recipient and the annuity interest is assignable only to Cal Poly).
Part of each gift annuity payment is tax-free. The tax-free portion of the payment is considered a “return of principal” and continues through the recipient’s estimated life expectancy.
We want to work with you to create a gift that best fits your circumstances and our needs. To learn more about the specific financial benefits you can enjoy by creating a deferred charitable gift annuity with Cal Poly, please contact us.
Information contained herein was accurate at the time of posting. The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. California residents: Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. Oklahoma residents: A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. South Dakota residents: Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.