If you are nearing retirement age, you may be considering various savings and investment avenues to build a retirement fund. Gift annuities provide a means to make a charitable contribution while receiving tax benefits and a promise of future income. In some cases, gift annuities can be matched. However, restrictions may apply to the type of gift annuity that is eligible for matching. Consult with an investment professional with specific questions about gift annuities.
Gift Annuity Definition
A gift annuity is a non-revocable gift made by a donor to a charitable organization, meaning, the donor cannot withdraw the gift at a later date. The charity makes regular payments to the donor during her lifetime based on several factors, including the age of the donor and the size of the gift annuity. The Internal Revenue Service (IRS) allows donors to defer tax payments on their contribution to a gift annuity until they or the named beneficiary of the gift annuity begin receiving distributions. Many donors establish gift annuities as a means to support causes they believe in while providing an income stream during their retirement years.
Corporate Matching Gifts
Corporate matching gifts represent donations made by corporations to charitable organizations that match contributions already donated or pledged. Many corporations provide corporate matching gift programs as a benefit to their employees. Corporate matching gifts often multiply the amount of the donation with no additional cost to the original donor. Many matching contributions are made dollar for dollar. In some cases corporate matching gifts far exceed the amount of the original contribution, matching each dollar with double, triple or even greater contributions.
Charitable Versus Deferred Gift Annuities
Deferred gift annuities differ from conventional gift annuities because charities do not pay distributions to donors right away. Younger donors in their 40s or 50s often favor deferred gift annuities because they allow donors to make tax deductible contributions without receiving distributions that may be subject to federal income tax. Deferred gift annuities also allow donors to name others as beneficiaries, such as a minor who receives distribution payments when she begins college or an aging parent.
Eligibility for Matching
Corporations often match the tax deductible portion of a charitable gift annuity. However, some corporations place restrictions on matching contributions to deferred gift annuities. Some corporations place other restrictions on the types of charitable organizations for which they provide matching contributions. For instance, some corporations do not match gifts made to athletic or religious organizations. Other corporations limit matching charitable contributions to gifts that are fully funded rather than gifts that are pledged but have not yet been fully funded.
- "On Wall Street"; Reaping The Tax Benefits Of Charitable Gift Annuities; Meryl Consentino; September 2010
- The Santa Fe Opera: Gifts That Generate Life Income
- Planned Giving Design Center; Charitable Gift Annuity; Marc Hoffman; May 2011
- Bankrate.com; Charitable Gift Annuities Let You Keep While Giving; Laura Bruce; April 2005
- IRS.gov; Topic 410 -- Pensions and Annuities; March 2011
- "Philanthropy Journal"; The Benefits of "Matching"; John Modzelewski; December 2008
- Bank of America: Matching Gifts
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