Charitable Gift Annuity

While several planned giving tools can provide a lifetime income, the simplest and most popular is the Charitable Gift Annuity.This gift returns income to you and/or a loved one for a period of years or for the remainder of your lifetimes – plus it may reduce your taxes.

How it Works

Through a simple agreement, you give INHF cash or securities and in return the Foundation pays you—and a loved one, if applicable—an income for as long as you both live.

The size of the payments depends on the amount you contribute and the ages of the beneficiaries. The older the beneficiaries, the higher the rate of return.

These rates are much higher than the returns currently provided by certificates of deposit, money market funds, treasury bills and bonds or other, similar kinds of investments. They are fixed for life and are backed by the full financial resources of INHF.

Benefits

In addition to lifetime income, gift annuities provide tax benefits that make them even more attractive:

  • If you fund an annuity with appreciated securities, you avoid, or at least defer, capital gains on the sale of the securities. 
  • You receive an immediate federal income tax deduction when the annuity is purchased. The size of the deduction depends on your age and the number of beneficiaries.
  • A significant portion of the income produced by the annuity is exempt from both federal and state income taxes. The effective after-tax return provided by a gift annuity is thus significantly higher than the stated interest rate.

Most importantly, the funds used to establish the annuity will pass to INHF, for whatever purpose you choose, when the income beneficiaries pass away, creating a wonderful legacy.

Where do I begin?

  • Discuss the idea of a charitable gift annuity with Foundation staff. They can describe other life income gifts, as well. Please e-mail Cheri Grauer, INHF Gift Planner, or call (800) 475-1846.
  • Talk to your financial advisor. 

While Iowa Natural Heritage Foundation makes every effort to give you accurate information, you should also consult your trusted professionals for legal, financial, insurance, or estate planning advice. The INHF staff are not engaged in rendering legal, accounting, or other professional services.

Federal Tax ID #42-1127544

Charitable Gift Annuity At a Glance

Here is an example of a possible INHF gift annuity scenario.
 

  1. Jane Smith, age 75, contributes $10,000 to INHF to establish a 6.5% charitable gift annuity.
     
  2. INHF invests the money and begins sending quarterly payments to Jane. This continues throughout Jane's lifetime.
     
  3. Jane receives:
  • A charitable deduction of $3,923 which may save Jane $1,294 immediately.
     
  • Quarterly gift annuity payments from INHF totalling $650 annually

($490 of the annual total comes to Jane tax free; $160 of the annual total comes to Jane as ordinary income)

The tax savings plus the annual payments yield an overall payout rate equivalent to 10.2% for Jane.
 

After all payments have been made to Jane, INHF still retains an estimated $7,000 to $10,000. The funds support the Foundation's work in areas most valued by Jane.