Foudation Futures: For the Future of Birthright Israel

Foundation Home >

Gifts That Generate Income

Is your desire to make a large gift to Birthright Israel coupled with a continuing need for income from those assets?

Life income gifts to Birthright Israel may take two basic forms: Charitable Gift Annuities and Charitable Remainder Trusts.

Charitable Gift Annuity

Are you interested in a life income plan that is accomplished by an easy-to-understand agreement between you and Birthright Israel?

A Charitable Gift Annuity (CGA), as the name implies, is an annuity with a charitable component - it combines a gift with an investment. A gift annuity agreement is a contract between Birthright Israel and the annuitant(s) under which Birthright Israel is obligated to make fixed, lifetime income payments to the annuitant(s). A CGA can benefit one or two individuals and can be established for a relatively modest sum. This agreement is regulated by the State and is subject to certain reserve investment requirements. The annuity rate is based on life expectancy and can be quite generous. The gift will also generate a current charitable income tax deduction that is calculated by subtracting the present value of the anticipated income payments from the total amount contributed to establish the annuity. After the last payment has been made, Birthright Israel will have access to the remaining funds.

If the annuity is purchased with cash, the income distributed each year will be paid to the annuitant(s) as both ordinary and tax-exempt income. If this is considered together with the available income tax deduction, the actual yield will be significantly higher than the fixed annuity rate. When appreciated securities are used to make the gift, the annual income will also have a capital gain component apportioned annually. Submit a Charitable Gift Annuity Information Request today.

Did you know that a CGA might significantly increase your retirement cash flow? Look at our CGA rates by age below.

One-Life Rates Two-Life Rates
AgeRate
505.3
515.4
525.4
535.5
545.5
555.5
565.6
575.6
585.7
595.7
AgeRate
605.7
615.8
625.9
635.9
646.0
656.0
666.1
676.2
686.3
696.4
AgeRate
706.5
716.6
726.7
736.8
746.9
757.1
767.2
777.4
787.6
797.8
AgeRate
808.0
818.3
828.5
838.8
849.2
859.5
869.9
8710.2
8810.6
8911.0
AgeRate
9011.3
9111.3
9211.3
9311.3
9411.3
95+11.3

Want more information about Two-Life rates? Submit a Charitable Gift Annuity Information Request today.

Below are examples of Charitable Gift Annuities (with cash or cash equivalent).

One-Life Two-Lives
Donor, age 65, contributes $18,000 of the proceeds from a matured CD to Birthright Israel Foundation to establish a Gift Annuity
#1 Purchase price of annuity $18,000
#2 Fixed lifetime annuity rate 6.0%
#3 Annual annuity payments ( quarterly, semi-annually or annually ) $1,080
#4 Current income tax charitable deduction $3,040
#5 Income tax savings from deduction ( line 4 times 30% marginal rate ) $912
#6 Net cost of the annuity ( line 1 minus line 5 ) $17,088
#7 Effective Annuity Rate ( line 3 divided by line 6 ) 6.3%
#8 Tax-free portion ( 19.9 years ) 69.6% *
* The tax-free portion will be calculated for the month that the gift annuity is established and will reflect the IRS Applicable Federal Discount Rate for that month.
Donors, ages 68 and 66, contribute $25,000 to Birthright Israel Foundation that they have invested in a maturing Treasury to establish a joint and survivor Gift Annuity
#1 Purchase price of annuity $25,000
#2 Fixed lifetime annuity rate 5.5%
#3 Annual annuity payments ( quarterly, semi-annually or annually ) $1,375
#4 Current income tax charitable deduction $2,670
#5 Income tax savings from deduction ( line 4 times 30% marginal rate ) $801
#6 Net cost of the annuity ( line 1 minus line 5 ) $24,199
#7 Effective Annuity Rate ( line 3 divided by line 6 ) 5.7%
#8 Tax-free portion ( 14.3 years ) 70.0% *
* The tax-free portion will be calculated for the month that the gift annuity is established and will reflect the IRS Applicable Federal Discount Rate for that month.

Deferred Charitable Gift Annuity

Are you a younger donor looking to reduce a high tax liability now while gaining an additional income later?

A variation of Charitable Gift Annuity is known as a Deferred Charitable Gift Annuity. It is similar in all respects to a CGA except that income payments are deferred until some future time. Although the payments are deferred, there is a current charitable income tax deduction. This deferral serves to raise the annuity rate considerably.

Want more information? Submit a Charitable Gift Annuity Request Form »

Below is an example of a Deferred Charitable Gift Annuity (one life with flexible payments).

Donor, age 55, contributes $20,000 to Birthright Israel Foundation to establish a Deferred Charitable Gift Annuity commencing when Donor reaches retirement age 67.
#1 Purchase price of annuity $20,000
#2 Fixed lifetime annuity rate ( commencing at age 67 ) 10.1%
#3 Annual annuity payments ( quarterly, semi-annually or annually ) $2,020
#4 Current income tax charitable deduction $2,127
#5 Income tax savings from deduction ( line 4 times 30% marginal rate ) $638
#6 Net cost of the annuity ( line 1 minus line 5 ) $19,362
#7 Effective Annuity Rate ( line 3 divided by line 6 ) 10.4%
#8 Tax-free portion ( 18.3 years after commencement ) 48.3% *
* The donor may elect to begin payments at a later age to obtain a higher rate (e.g. age 68 - 10.9%, age 69 - 11.9%, age 70 - 12.9%, etc.). The tax-free portion will be
   calculated for the month that the gift annuity is established and will reflect the IRS Applicable Federal Discount Rate for that month.

Charitable Remainder Trust

Are you interested in a life income plan but looking to retain some control over how the funding assets are invested or have a desire for payments that can keep pace with inflation?

There are two types of this life income vehicle. One, the Charitable Remainder Annuity Trust (CRAT) provides for a fixed rate of income measured, usually, by the life or lives of named individuals. Once the rate is set in the trust, it is multiplied by the value of the initial contribution to determine the lifetime annuity payments. These payments never change throughout the term of the trust. The lowest rate allowed by law is 5%. If a rate is set too high, the trust may not qualify for tax benefits. Payments may be made as frequently as quarterly.

The other, the Charitable Remainder Unitrust (CRUT) also provides for a fixed rate. The difference between the Unitrust and the CRAT is that the fixed rate is multiplied against the value of the CRUT as determined annually on the last day of the calendar year or the first business day of the next year. Assuming the assets in the CRUT increase in value over the prior annual period, the payments to the individuals in the next year will also increase by the fixed rate multiplied against the increase in value. Thus, the CRUT is anticipated to be a hedge against inflation.

Both the CRAT and CRUT provide the following benefits to a contributor: