Giving to the College

Ways to Give

Charitable Gift Annuity

Most states permit the exchange of real estate for a charitable gift annuity. In order to issue gift annuities, however, charitable institutions must be licensed, generally by the state insurance commissioner, and their annuity contracts must conform to state law. The College is licensed to execute gift annuities.

When a charitable institution issues a gift annuity in exchange for real estate, it has effectively purchased the property. The annuity is a contract between the charity and the donor wherein the charity agrees to pay the donor a specified amount each year for the donor's life. This payment must be guaranteed by the charity and is backed by its entire assets.

Many donors prefer gift annuities to charitable remainder trusts because of their contractual nature and guaranteed payment provision. The annuity payment is a fixed amount and is not based on the relationship between the appraised value and what the property later sells for. Annuity payments and property expenses are paid from institutional funds.

The annual payment to the donor represents a percentage of the fair market value of the property at the time of the exchange. For example, a 7.6% gift annuity in exchange for a $100,000 property would result in an annual payment of $7,600.

While the percentage is negotiable, most charitable institutions follow the recommendations of “The Committee on Gift Annuities”. The Committee is composed of representatives from charities throughout the country who issue gift annuities and their recommended rates are revised and published every three years. Their recommended rates, based on the annuitants age(s), are calculated to result in approximately 50% of the principal remaining after the last annuitant dies.

Any examples given are meant to be illustrations of the benefits of charitable vehicles available to you. This should not be construed as legal or tax accounting advice. Always consult an attorney for specific arrangements. The College can assist you in this regard.

For further information on charitable gift annuities, fill out the Request for Information Form or contact Bill Heaton, Vice President of Advancement at wheaton@scco.edu or at 714.449.7464.