Charitable Gift Annuity
The simplest life income gift arrangement, the Charitable Gift Annuity is a contract between Wharton and the donor, providing for payments to one or two beneficiaries at a fixed rate. In exchange for a gift of $10,000 or more, Wharton will provide an attractive annuity rate and guaranteed payments for life. The donor is eligible for an income tax deduction in the year that the gift is made. The donor may contribute cash, or publicly traded securities to establish a gift annuity. A portion of each payment during the annuitant’s life expectancy is treated by the IRS as the nontaxable return of principal, another portion is taxed as capital gain to the donor if appreciated assets are contributed and the balance is taxed as ordinary income.
Benefits of a Charitable Gift Annuity
- Supplement retirement income
- Guaranteed payments backed by the assets of the University
- Partially tax-free income
- Capital gains tax savings on appreciated property
- A current income tax deduction
INCREASE YOUR INCOME AT RETIREMENT
Judith Nelson, W’48 is retired and in her mid-eighties. Through saving and a conservative lifestyle, she lives comfortably and is able to do the things she loves, like travel. After meeting with a Gift Planning professional, she learns the benefits of a CGA and how she can make a gift and receive lifetime payments. She decides to make the gift and fund it with stock that she bought long ago. Miss Nelson establishes a $25,000 charitable gift annuity funded with 10% cost basis. She is entitled to an income tax deduction of over $13,700. She will receive an annuity payment of $2,025 per year for life. In addition, a portion of her CGA is free of income taxes and a majority of her capital gain is spread over her life expectancy. Most importantly, the remainder of her CGA will support The Campaign for Wharton.
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Dean of the Wharton School
Reliance Professor of Management and Private Enterprise
Professor of Political Science.