Charitable Estate Planning
Charitable Gift Annuity

NSO French HornsIf you would like to set up a charitable gift to the Kennedy Center or National Symphony Orchestra that would provide you income for life, read on:

The Charitable Gift Annuity is an estate planning vehicle that has been used by charitably minded people for more than a century to support favored nonprofit institutions without sacrificing current income. The charitable gift annuity with the John F. Kennedy Center for the Performing Arts and National Symphony Orchestra is a contractual arrangement governed by the laws of District of Columbia whereby you make an irrevocable charitable contribution of cash or marketable securities to the Center and Orchestra in exchange for a promise that you (and one successor beneficiary if you wish) will receive a specific amount of partially tax-free income each year for life. The contributor may enjoy federal and state tax benefits. At the completion of the terms of the Charitable Gift Annuity agreement, the remainder of the original principal of your contribution will benefit the Center and Orchestra's endowment.

How a Charitable Gift Annuity works:

  • It may be set up for one or two lives.
  • It may be funded with appreciated property or cash.
  • The fixed annuity amount a donor may receive is determined taking into account the annuitants age at the time the annuity is established as well as the Internal Revenue Service discount rate. The Kennedy Center follows guidelines set by the American Committee on Gift Annuities, a voluntary association of charities. Generally, the older the annuitant, the higher the annuity rate paid. Depending on prevailing market conditions and terms of the annuity, rates may be as high as 12% per year.
  • Since the annuitant receives back some of the original principal as income, part of the income is tax-free. To many, the tax-free income is one of the most appealing features of the charitable gift annuity
Benefits a Charitable Gift Annuity provides include:
  • Major contribution in support of the programs of the Kennedy Center and the National Symphony Orchestra
  • Partial bypass of capital gain on highly appreciated securities - over the annuitant's lifetime they will receive only part of the original capital gain. The donor or annuitant never realizes the balance of the capital gain. It is considered part of the donation to charity.
  • Partially tax-free, guaranteed annuity payments.
  • Charitable deduction - the IRS grants the donor a tax deduction to be enjoyed immediately recognizing the future benefit to the charity of the donation of remaining principal.
Gift Annuity Variations:
  • Deferred Payment Gift Annuity - As a tool for retirement planning and a means to guarantee income in the future one may choose to defer the initial payment for a minimum of one year.
    • The benefits of a deferred charitable gift annuity include: 1) income deferred until retirement, 2) partial tax-free income, 3) current charitable deduction in year of gift.

  • Gift Annuity for Home - it is possible under certain circumstances to fund a charitable gift annuity with the remainder value from a mortgage-free home.
    • The benefits include: the donor receives the benefit of living in the home for life while receiving an annual annuity.

Sample - Charitable Gift Annuity Agreement - One Life

Frequently Asked Questions about Charitable Gift Annuities