RENEW offers a gift annuity for those 60 and older

RENEW offers a gift annuity for those 60 and older

RENEW Wisconsin has partnered with Madison Community Foundation (MCF) to offer a charitable gift annuity.

What is a charitable gift annuity?

Like other annuities, a charitable gift annuity offers a regular stream of income on an initial investment until your death. However, charitable gift annuities are a form of planned giving and therefore differ from other annuities in several ways.

Here is how the charitable gift annuity works:

  • You make a donation to a nonprofit organization, such as RENEW Wisconsin, and take a partial tax deduction.
  • MCF, as the holder of the annuity funds, invests the funds on behalf of RENEW Wisconsin and pays you (the annuitant) a regular payment until your death. A portion of this income also may be tax exempt.
  • After your death, the balance of the invested funds go to the nonprofit organization (RENEW Wisconsin, in this case).

The amount of your tax deduction depends on a number of factors, including your age at the time you establish the charitable gift annuity, the size of your donation, and whether the annuity is for a single person or a couple. You should consult with your tax advisor to determine the specific tax benefits for your situation.

Who can set up a charitable gift annuity?

The gift annuity is available for donors who are 60 and older. MCF requires an initial investment of $10,000, and offers an interest rate on the gift that ranges from 4.3% for a single 60-year-old to 9.3% for a couple who are both 95 and older. (There is no upper limit on investments.)

Whatever is left in the fund at the time of your death will be put into RENEW’s endowment fund with MCF. This fund supports Energy Analysis & Policy (EAP) graduate student interns at UW-Madison’s Nelson Institute who are working at RENEW. The endowment was created by an MCF grant and gifts from EAP alumni and RENEW members a few years ago.

As an example, a 71-year-old, single RENEW member recently established a gift annuity with MCF for RENEW.  He made an initial investment of $10,526. Based on his age and the amount of his initial investment, his annuity earns an interest rate of 5.7%, or $600 a year, which is paid quarterly. He was eligible to take a tax deduction of $3,527, and $460 of the annual income is tax free.

The gift annuity is ideal for people who are older than 60, looking for a higher interest rate than offered by certificates of deposit (CDs) for their savings, and who want to support a nonprofit, even after death. The charitable gift annuity through MCF is designed to have a residual amount of at least 50% of the original gift for the charity. In 2017, the average amount left for charities from charitable gift annuities using the same rates (those recommended by the American Council on Gift Annuities) was 62% of the initial contribution.

For more information, contact Tyler Huebner at RENEW Wisconsin (608.575.2201 or tyler.huebner@renewwisconsin.org) or Darcy Kobinsky at MCF (608.232.1763 or dkobinsky@madisongives.org).