The Sandhills Gift Annuity Program
The Sandhills Charitable Gift Annuity provides an opportunity for friends of Sandhills to support the college while receiving a lifetime income. The Gift Annuity is an astute way for you to retain the lifetime benefits of your gift AND advance the mission of Sandhills Community College. You may choose direct the ultimate use of your gift to the college’s major endowment initiative—The 2020 Fund for Sandhills—or to the general purposes of SCC—or to a specific purpose that you may designate. The advancement staff would be happy to discuss these options with you.
What is a Gift Annuity and how does it work?
A Charitable Gift Annuity is a simple contract between you and the Sandhills Community College Foundation (SCC Foundation). In exchange for your irrevocable gift of cash or marketable securities, the SCC Foundation agrees to pay one or two named annuitants a fixed annual sum, in quarterly installments, for life. This payment is guaranteed by the assets of the SCC Foundation. The older the designated annuitants are at the time of the gift, the greater the income the Foundation can agree to pay. For example, under current guidelines, an 80 year old annuitant would receive a 7.6% annual annuity, while a 60 year old annuitant would receive 5.5%. Where there are joint annuitants, the rate would be slightly lower. Because part of the annuity payment is typically a return of principal, part of each payment is tax-free, thereby increasing the annuity's after-tax value. Upon termination of the payments, the remaining principal attributed to your gift is used by the SCC Foundation for the benefit of Sandhills Community College.
How can the Charitable Gift Annuity benefit you?
- Income - you and a named annuitant can receive a guaranteed, fixed lifetime income from Sandhills.
- Capital Gains - If you fund your gift annuity with appreciated stock, you will pay capital gains tax on only part of the appreciation. Additionally, if you name yourself as the annuitant, the partial capital gains tax will be spread out over many years rather than all being due in the year of your gift.
- Current Income Tax Deduction - A portion of your gift is deductible in the year of your gift, based upon the ages of the annuitants.
- Increased Income - If you own assets producing low income, you can increase your return from the assets through a Charitable Gift Annuity.
- Estate Tax Savings - Your estate may enjoy reduced probate costs and estate taxes.
- Support for Sandhills - Your gift will provide valuable future support to Sandhills Community College.
What determines the amount of the annuity payment?
As previously indicated, the amount of the annuity payment depends upon the age(s) of the annuitants. The Sandhills Community College Foundation uses the rates set by the American Council on Gift Annuities. Our development staff would be happy to create a sample gift scenario for you which would show the annuity rates you would receive and all the accompanying tax information.
An example of how the Gift Annuity works:
A donor, age 70, irrevocably transfers appreciated stock worth $25,000 to the SCC Foundation to fund a Gift Annuity which names both him and his wife (also age 70) as lifetime annuitants. The couple will receive 4.6% of their gift equaling $1,150.00 annually, for the rest of their lives. Assuming the original cost of the stock was $10,000, approximately $168 of this payment will be tax free, another $573 will be taxed at the capital gains rate, and the balance of approximately $197 will be taxed as ordinary income. The donor receives an immediate tax deduction of $6,370 (assuming an applicable federal rate of 1.4% (March 2012). The couple will be recognized for their gift as Legacy Benefactors of Sandhills Community College.
Retirement Planning through the Deferred Gift Annuity:
Just like the regular Gift Annuity, the Deferred Gift Annuity is a simple contract between you and the SCC Foundation whereby the SCC Foundation agrees to pay one or two annuitants a fixed, lifetime income in exchange for an irrevocable gift of cash or marketable securities. However, this arrangement allows a person to make a current gift, delay the receipt of the income until a pre-selected future date, and still qualify for a current charitable deduction. The date is often chosen to coincide with the anticipated date of retirement.
The older the designated annuitants are at the time of the gift and the longer you defer the payments, the greater the annuity amount the Sandhills Community College Foundation can agree to pay. As with the immediate Gift Annuities funded by a gift of appreciated securities, in most cases part of the payment will be tax free and you will pay only partial capital gains tax, spread over many years. The rates for a Deferred Gift Annuity are generally very attractive. The advancement staff at Sandhills can prepare a sample gift scenario for your review which will demonstrate these rates and provide additional tax information.
To use the on-line “Gift Calculator” to create an example of your own gift annuity please click here.
** The gift annuity calculations provided by the on-line calculator are for illustration purposes only and should not be considered legal, accounting, or other professional advice. You should seek the advice of professional counsel before creating a gift annuity as part of your estate plan.
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