What is a Charitable Gift Annuity?
A gift annuity is a simple contract between the donor(s) and the Central Park Conservancy (hereinafter "CPC"). In exchange for the donor's(s') contribution, CPC promises to make fixed, guaranteed payments for life to one or two annuitants (usually, but not necessarily, the donor(s)). The amount paid is based on the age(s) of the annuitant(s), in accordance with CPC's rate schedule.
Not a Commercial Investment
The act of establishing a gift annuity with CPC is not, and should not be viewed as, an investment. Rather, it is a way to receive annuity payments while making a charitable donation. In this respect, a gift annuity issued by CPC is different from a commercial annuity. However, the fact that you are making a charitable gift may provide you with tax benefits, including a current federal income tax charitable deduction (if you itemize your deductions), annuity payments which are partially tax-free, and future estate tax savings.
Gift Annuity Rates
The gift annuity rates paid by CPC and most other non-profits are those suggested by the American Council on Gift Annuities (ACGA), which is a national organization of charities that has been in existence since 1927. These rates have been calculated so as to provide attractive payments to the donor and/or other annuitant(s) and also to result in a significant portion of the contribution remaining for the charity. Because a charitable gift is involved, the rates are lower than those available through commercial annuities offered by insurance companies and other financial institutions.
Assets Backing Annuity
The annuity payments are a general obligation of CPC, and they are backed by all of our assets. Assets received by CPC for gift annuities are maintained, by law, in a segregated account. Morgan Stanley Smith Barney administers CPC’s gift annuity account under the supervision of our Board of Trustees. Assets held in the segregated account are invested in a conservative and disciplined manner. Individuals entitled to receive annuity payments from CPC qualify as general creditors of CPC. Common investment funds managed by our organization are exempt from registration requirements of the federal securities laws, pursuant to the exemption for collective investment funds and similar funds maintained by charitable organizations under the Philanthropy Protection Act of 1995 (P.L. 104-62). Information in this letter is provided to you in accordance with the requirements of that Act.
Points to Remember
- A contribution for a gift annuity is irrevocable. The principal you contribute cannot be returned to you.
- The right to annuity payments may not be assigned to any person or organization, other than CPC.
- The gift date is the date when you actually transfer assets. In the case of cash, it is the date you mail or deliver a check. In the case of an electronic transfer of securities, it is the date they are received into the account of CPC. If you have certificates, it is the date they are properly endorsed and mailed or delivered.
- The gift annuity is governed by applicable state laws.
Always consult your tax professional to determine if a gift annuity is right for you.
All information provided to you by CPC is for illustration purposes only and should not be considered legal, accounting, tax, or other professional advice.