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Gifts That Give Back to You
How can a gift pay you back?
Your gift to The College of New Jersey Foundation does not have to be made outright, because we offer gift plans that pay you income in return for your contribution. You can receive fixed or variable income, take payments for your lifetime or for a term of years, and direct the income to beneficiaries other than yourself. In essence, you make a contribution to us yet retain benefits from what you gave away.
Your charitable deduction is based on the full market value of the assets you gave, minus the present value of the income interest you retained. The higher the income payout, the lower the deduction.
These flexible, creative gifts address a variety of your planning objectives. For our part, the return of income allows you to consider a more substantial gift to us than you might be able to afford in an outright format. Even though we cannot use these gifts until the death of the last income beneficiary, they give us long-term financial strength that will sustain us in the future.
Charitable Gift Annuity
A charitable gift annuity is a simple contract between you and a charitable organization that pays you a fixed dollar amount (an annuity) for your lifetime and that of another individual, if desired, based upon your age (s) at the time o your gift. The older you are, the higher the annuity. If you use appreciated property, such as stocks, to fund the gift annuity, you will escape the capital gains tax on the gift portion of the transaction and the remaining gain will be apportioned over your lifetime. This is a wonderful way to increase income from stocks that pay small dividends and carry heavy capital gains.
A Deferred Charitable Gift Annuity
A deferred charitable gift annuity offers current tax benefits but delays the income until you reach a specified age. In exchange for agreeing to defer your income for a period of time, you will receive a higher interest rate, depending on your age and length of the deferral period. If you are considering a gift annuity, but do not need the income immediately, you may wish to compare the benefits of a deferred gift annuity to determine which method is most advantageous.
Another variation is the flexible deferred charitable gift annuity. With this plan, you do not have to choose a date to begin payments in advance. You can elect to wait a period no sooner than 10 years, but no more than 20 years. With this plan, however, the charitable deduction is determined by the payout’s lowest possible starting date, which would be a minimum of 10 years.
A Charitable Remainder Annuity Trust (CRAT)
A charitable remainder trust is a trust that will pay the donor (and one or more other named beneficiaries, if desired) a specified annuity income either for life or for a period of time not to exceed 20 years.
A charitable remainder unitrust or CRUT has many of the same attributes as CRAT, but with more flexibility and planning opportunities.
Pooled Income Fund
A pooled income fund is a common trust fund established and maintained by a charitable organization to receive contributions from many individual donors. The donors to the fund retain an income interest in the fund for their lifetimes. The payout to income beneficiaries is determined by the interest and dividends earned by the fund each year.
N.B. The College of New Jersey does not currently offer a Pooled Income Fund.
Please call The College of New Jersey Gift Planning Office at 609-771-2393, or e-mail manetas@tcnj.edu for more information.
