HWS Capital Campaign :: Supporting the Campaign : Charitable Gift Annuities

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A charitable gift annuity is one of the easiest ways to make a life income gift. It is a simple contract that guarantees a specified rate of return or income to the donor in exchange for a gift. The rate of return is based on one's age and is generally higher for older donors. Gift annuities may be funded with either cash or securities with a minimum gift of $25,000 or more.

A charitable gift annuity may allow you to maximize your current spendable income and enjoy the security of a fixed rate of return.

A charitable gift annuity is an agreement between you and the Colleges. In exchange for your gift of cash or marketable securities, we promise to pay you and, if you wish, another annuitant an income for life based upon your age(s). You will receive an income tax deduction for a portion of the amount transferred for your gift annuity.

A portion of your annuity payment may be a tax-free return of your investment in the annuity. If you fund the annuity with appreciated securities, you will be able to report the capital gain associated with the value of the annuity over a period of years. Therefore, the income tax you will owe on your annuity payments may be taxed on three levels: tax-free, as ordinary income, and as capital gain.

Summary about charitable gift annuities:

Minimum gift is $25,000.
Annuity rates are recommended by the American Council on Gift Annuities and approved by the State of New York Insurance Board and are subject to change periodically.
You would receive semi-annual income payments.
One or two beneficiaries may receive income.
They may be funded with cash or marketable securities.
Taxation of income occurs on three levels:
1. Ordinary income.
2. Tax-free return of principal for life expectancy of the annuitant(s).
3. Capital gain recognized over the life expectancy of the annuitant(s).
Charitable deduction is the difference between the fair market value of the gift and the cost of the annuity, based on actuarial tables.
Income payments may be deferred to a predetermined future date.
Advantages to donor:
1. Income tax charitable deduction when making the gift
2. Partially tax-exempt income payments
3. Realized capital gains are reported over annuitant's lifetime
4. Payments are made to the donor and/or other person

You may also defer your income payments to a predetermined date in the future by creating a deferred gift annuity. Every aspect of the deferred annuity is the same as the standard gift annuity except that the payments are deferred for at least 12 months and the income rates are higher. The deferred gift annuity provides you with a future fixed income stream that could be used to replace other sources of income.

Look at some specific rates on current gift annuities. A graphic example of a charitable gift annuity is available as well.

Example: Ben Wolcott, age 54, would like to make a gift to the Colleges' campaign that will also count toward his classes' 35th Reunion goal. At the same time, he wants to plan well for his retirement which he hopes will take place in 10 years. If Ben created a gift annuity today for $30,000 and deferred the income for 10 years, he would receive a deferred gift annuity rate of 8.58 percent*. He would receive an income tax charitable deduction of $2,868 this year and a portion of the income, once received, would be tax free. Ben could fund the deferred gift annuity with cash or marketable securities. By completing this gift, Ben supports the Colleges' capital campaign, helps his classes reach their Reunion goal and most importantly, secures a fixed income payment for his retirement.

*These rates are based on the recommended rates by the American Council of Gift Annuities as of July 15, 2003. These rates do change periodically; please contact the Office of Gift Planning to receive the most current rates.

Please Note:
Gifts of this nature should be carefully considered in relation to your comprehensive financial and estate plans. We strongly recommend that you consult an attorney and/or financial adviser before completing a planned gift to the Colleges.

Thank you for remembering Hobart and William Smith Colleges.

Recent HWS Example:
Howard and Jackie Davidson - Wheeler Society

Howard "Spike" Davidson '55 and Jackie Askin Davidson '55 are used to taking chances and living life to the fullest. They met on a blind date set up by classmate Gary Getman, got married during their senior years at Hobart and William Smith Colleges, went off to Cornell where Spike got his master's in business, had two lovely children, started an accounting firm and sponsored a Vietnamese immigrant family.

Now, in the year of their golden anniversary and their 50th Reunions at Hobart and William Smith, they are celebrating their lives by enabling others to take chances as well.

Spike and Jackie have supported the Colleges throughout the years as volunteers and with contributions to the Fund for Hobart and William Smith. This past year, they decided to go a step further and join the Colleges' Wheeler Society. They worked with the planned giving staff to create a charitable gift annuity. Their gift will pay them income for their lifetimes, while providing for the Colleges' future.

"We decided it was time to give back to the communities that were so important to us throughout our lives," said Spike Davidson.