The charitable gift annuity is not a trust, but a contract between you and the Memphis Foundation. In exchange for your irrevocable gift of cash or appreciated assets, the foundation agrees to pay a fixed sum each year for life to one or two annuitants (income beneficiaries), named by you. Gift annuity payments are based upon the initial market value of the assets contributed and the ages of the income beneficiaries at the time of the gift. The older the beneficiaries, the greater the annuity payout will be. When the gift annuity ends, the remaining assets are used for the purpose you designate.
Charitable gift annuity example
Miss Hope taught high school English for 38 years. Having spent her working life seeing the importance of learning in peoples’ lives, she dreamed of creating a scholarship, but did not feel she could do so without the income her assets produce. A charitable gift annuity was her answer. Now 75 years old, Miss Hope made a cash contribution of $50,000 to establish an annuity paying her a guaranteed percent annually. She also benefited from a charitable deduction. Moreover, 66 percent of the annuity is tax-free income to her. Miss Hope worked with a development professional at Memphis to establish criteria for her scholarship, which will be funded at her death. Thus, she realized her dream of helping young people, while providing income for herself.