Gifts that Give Back

Charitable Gift Annuities: Guaranteed Income and Tax Benefits

A Charitable Gift Annuity (CGA) is a simple one-page contract between the College and you, the donor. We promise to pay a fixed, predetermined amount quarterly, semi-annually or annually to you, and/or one other beneficiary for life. If you own highly appreciated securities with low yields, or Certificates of Deposit, CGAs can provide: an immediate tax deduction, increased income, some of which is tax-free, reduction and spreading out of capital gains tax and reduced estate taxes. A Deferred Gift Annuity is similar to the CGA, except that payments can be deferred until you might be in need of greater income, such as during retirement years.

Example: Mrs. Smith, age 70, transfers $25,000 of appreciated securities to Champlain in exchange for a guaranteed 7.2% annuity of $1,800 for the remainder of her lifetime. The stock had been paying only 2% ($500), and so she has increased her annual income by nearly four times; she receives a charitable deduction of $9,568; $970 of the annuity will be treated as tax-free return of principal; and she is able to spread out the capital gain over the next 16 years because the transaction is treated as a bargain-sale (part gift and part annuity).

Go to a Donor Profile

Charitable Remainder Trusts: A Flexible Investment Plan

You may use a number of assets to establish a Charitable Remainder Unitrust (CRUT), although most are funded with cash, appreciated securities or real estate. Unlike a Charitable Gift Annuity, you can make multiple gifts to a CRUT. Champlain invests the assets in the unitrust for growth and income and you and/or other named individuals receive income for life or a term of years at a fixed percentage of the annual fair market value of the principal of the trust.

As the principal of the trust changes, so, too, do the payments. If invested well, your income increases and the amount left to Champlain at the end of the life interests of the beneficiaries increases as well. In addition, you receive a substantial income tax deduction in the year of the donation and estate tax benefits. Another option is a trust that pays a level income for lifetime and is funded with a single gift, known as a Charitable Remainder Annuity Trust.

Example: Mr. and Mrs. Smith, both age 70, own $100,000 worth of mutual fund shares, which they purchased several years ago for $20,000. This fund has emphasized growth, and the dividend yield is only 3%. They would like more money to spend during their retirement, but are afraid of sellling the shares and reinvesting because of the capital-gains tax they would owe.

They decide to contribute the shares to a unitrust and select a 6% payout rate. Their income immediately increases from $3,000 to $6,000 per year and will grow over time if trust assets appreciate in value.

The Smiths also receive a charitable deduction of $36,187, and they avoid a potential capital-gains tax of $16,000, or 20%. Now they have turned a low-yield asset into a high yield asset, they have realized significant tax benefits and they are able to make a larger gift to Champlain than they may have been able to from other assets.

Go to a Donor Profile

Thank you for caring about the future of Champlain College.
If you have any questions, or would like additional information about how to include Champlain in your estate plans, please contact Susan Moses at PlannedGiving@champlain.edu, or call the telephone listed below:

Champlain College
163 South Willard Street
P.O. Box 670
Burlington, VT 05401-0670
Phone: 1-866-421-7170 (toll free) / 802-865-5428 (local)
Fax: (802) 860-2787