Charitable Gift Annuities
If you wish to make a significant charitable gift, but still require the income generated by your assets, you may want to consider a charitable gift annuity. A charitable gift annuity allows you to support the Canadian Red Cross now, while still receiving a guaranteed annual income for life.
Under this form of planned giving, you would transfer a sum of money to Red Cross. A Deed of Agreement is drawn which authorizes Red Cross, acting on your behalf, to purchase a commercial annuity that will provide a fixed amount to the donor in regular payments throughout your lifetime. (This is sometimes called a re-insured gift annuity.) It is also possible to arrange an annuity that will provide regular payments for another person, such as your surviving spouse.
The Red Cross can use whatever remains after the annuity is purchased to fund its humanitarian programs and services. (Typically, rates are structured so that 25-30% of the principal amount is available for charitable purposes.) In addition, upon your death, Red Cross may receive the residual amount in the annuity. As the donor, of course, you can stipulate the specific programs or geographic areas that you would like your donation to serve.
Benefits
As the donor, you are guaranteed payments for life. Often, these will be higher than the interest income provided by other types of investment. However, you should be aware that a gift annuity requires that you irrevocably commit your principal to this arrangement.
Annuities provide tax advantages - When the arrangement is established, you will receive a charitable donation tax receipt for the amount of the contribution that exceeds the amount used to purchase the annuity (typically 25-30% of the principle). This is calculated based on life expectancy and other factors. As well, a significant portion of the annuity payments you receive are tax free.
The Red Cross recommends that you consult with your financial or legal advisor before committing to an annuity, to determine the way of giving that can best meet your needs.
For more information, contact your local Legacy Representative.
