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A Charitable Gift Annuity
Provides the Donor with regular payments for life, and an immediate income tax deduction, while providing long-term financial support to New England Forestry Foundation (NEFF). Charitable Gift Annuities are straightforward to establish and can allow Donors to increase their current income. Charitable Gift Annuities are commonly funded with appreciated financial assets such as common stock, but can be funded with almost any type of property.
- What is a Charitable Gift Annuity?
- A Charitable Gift Annuity is part charitable gift and part payment on an annuity contract. The Donor transfers property to NEFF’s fiduciary and in return the fiduciary enters into a contract to pay the Donor a fixed annuity for life.
- What Does NEFF do with the Gifted Property?
- NEFF has a partnership with The Boston Foundation to facilitate the administration of Charitable Gift Annuities. The Boston Foundation will provide the exclusive management of these gifts and provide consultation services, calculations and all necessary documents. There is no fee to you or NEFF for this service.
You transfer assets to The Boston Foundation (the Foundation) which are used to fund the annuity. The annuity payments are backed by the assets of the Foundation, which are substantial, and the Foundation oversees the administration and investment at very low rates.
NEFF has an established component fund at The Boston Foundation known as the New England Forestry Foundation Fund. This is a Designated Fund to provide support to NEFF in perpetuity consistent with the wishes of the Donor. If you wish your gift can be designated to the New England Forestry Foundation Fund.
- How is the Amount of the Annuity Payment Determined?
- The amount of the annuity payment is determined by the following factors: (1) the age and number of beneficiaries; (2) the annuity rate agreed upon by the Donor and the Foundation; and (3) the value of the donated property. The Council on Gift Annuities publishes gift annuity rates for beneficiaries with different ages. The older the beneficiary the higher the maximum annuity. In most cases the annuity rate will range from 6.0% to 10.0 % per annum.
The Donor has the option of selecting an annuity payment that is lower than the rate recommended by the Council on Gift Annuities, which usually results in a higher tax deduction. In all cases NEFF recommends checking with an attorney, accountant or other financial advisor while planning a Charitable Gift Annuity.
- How are the Payments Made?
- Payments can be made annually, semiannually, or quarterly as desired by the Donor.
- How is the Tax Deduction Determined?
- The tax deduction is a function of the value of the property, the age of the beneficiary, the annuity rate selected and the federal discount rate in effect at the time of the gift. The charitable deduction will increase when the annuity rate is lower than that recommended by the Council on Gift Annuities or if the Donor chooses to have the annuity payment begin later in life (called a deferred gift annuity).
- How is the Annuity Payment Taxed?
- When a Charitable Gift Annuity is funded with an appreciated asset held over one year the annuity payments usually will be broken into three parts for tax purposes: One part will be tax free, representing a return of the Donor’s purchase price or “tax basis”; one part will be taxed as capital gain income; and one part will be taxed as ordinary income. If the beneficiary lives beyond his or her life expectancy, subsequent annuity payments will be treated as ordinary income.
- How do I get started with a Charitable Gift Annuity for NEFF?
- Call or write:
Edward DeVenne
Director of Finance and Administration
P.O. Box 1346
Littleton, MA 01460
Tel. (978) 952-6856 x103
edevenne@newenglandforestry.org
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Board of Directors
