Funding a Charitable Gift Annuity with Cash or Appreciated Securities
Which is Right for You?
Creating a Charitable Gift Annuity (CGA) is a wonderful way to support The LeTourneau University Foundation while securing fixed payments for your life. Two excellent options for funding your CGA are cash and appreciated securities, such as stocks, bonds, or mutual funds that you have held for more than one year. Each option offers unique benefits, so it’s worth exploring which funding source aligns best with your financial and philanthropic goals.
Why Choose a Charitable Gift Annuity?
A Charitable Gift Annuity is a simple contract between you and The LeTourneau University Foundation. In exchange for your charitable gift, The LeTourneau University Foundation agrees to make fixed payments to you every year for life. The payment amount depends on your age at the time of the gift, and it remains constant, providing reliable payments that won’t fluctuate with the market. This stable income can be particularly appealing if you are looking to supplement retirement income. Once the annuity ends, the remaining balance supports The LeTourneau University Foundation’s mission, creating a lasting legacy.
Funding a CGA with Cash:
- Straightforward Setup: Funding a CGA with cash is simple and quick. There’s no need to account for market value fluctuations or calculate capital gains, making cash funding ideal if you want an easy, straightforward gift.
- Tax-Free Payments: You receive fixed payments each year for life. A portion of these payments will be tax-free for many years. This tax advantage can make cash a cost-effective option for funding your CGA.
- Charitable Deduction: You are eligible for an immediate income tax charitable deduction based on the value of your gift and the annuity payout, subject to IRS limitations. This deduction can reduce your taxable income in the year of your gift. You may carry forward any unused deduction for up to five additional years.
- Ideal for Those with Ample Cash Reserves: If you have liquid assets that you don’t need for other expenses, using cash to fund a CGA can help convert cash into a steady stream of payments while supporting a cause you care about.
Funding a CGA with Appreciated Securities
- Reduced Capital Gains Taxes: You recognize only a portion of your capital gain in the appreciated securities. What’s more, in most cases you can spread payment of the capital gains tax you do owe over many years. If you sell the appreciated securities yourself, you will owe capital gains taxes on all the appreciation in the year of sale.
- Income Tax Deduction: You are eligible for an income tax charitable deduction based on the fair market value of the property you give, subject to IRS limitations. This deduction can reduce your taxable income in the year of your gift. You may carry forward any unused deduction for up to five additional years.
- Lifetime Payments: You receive fixed payments for life. A smaller portion of the payments will be tax-free for many years than if you fund the CGA with cash. The difference will be capital gain income instead.
- Diversification: Donating appreciated securities to fund a CGA can serve as a diversification strategy, allowing you to reduce concentrated holdings in your investment portfolio without incurring immediate capital gains taxes.
- Charitable Impact: After the annuity payments conclude, the remaining funds support The LeTourneau University Foundation’s mission, making a lasting impact.
Which Option is Right for You?
Consider your personal financial situation and goals:
- Choose Cash if you prefer a simpler process, have ample cash reserves, or want to maximize the tax-free portion of your annuity.
- Choose Appreciated Securities if you wish to avoid capital gains taxes in addition to receiving a substantial income tax deduction, or to diversify your investment portfolio.
Consult with Your Advisors
Before you fund a Charitable Gift Annuity, we encourage you to speak with your financial and tax advisors to evaluate how a CGA fits within your overall financial plan.
If you would like to explore establishing a CGA with cash, appreciated property, or other assets, please contact us. We can provide you with information tailored to your needs, including the current annuity rates, potential tax benefits, and the long-term impact of your gift.
Thank you for considering a generous gift to help sustain The LeTourneau University Foundation.
“Estate and Legacy Planning” – Does it Really Matter?
Think about this: early in the life of Israel we see the Lord repeatedly reminding them about the importance of passing on to “their children and their children’s children” God’s testimony of faithfulness (Deuteronomy 4:9 and following). God went on to tell the children of Israel that He wasn't’t talking directly with their children, but rather with them – because “their eyes had seen” all that the Lord had done (Deuteronomy 11:2-7).
Estate planning, when done with intentionality and by including a narrative of one’s life, can be an incredible means of motivating future generations. Further empowering such planning with
Watch for our next installment where we will purpose to unpack …
- what estate and legacy planning is
- why it’s important
- what it looks like
and most importantly,
- how it can be a compelling motivation for succeeding generations when it is empowered with an integrated level of charitable gift planning
As always, if we can be of service to you in this area, or for any questions you may have, please do not hesitate to email us at leavealegacy@letufoundation.org or call us toll-free at 903-500-2972 and ask for Tom Bevan.
And always a proper disclaimer: When considering what we might point to by way of a benefit to you in any given situation, always assure to consult your legal and tax advisor for what qualifies as the actual tax treatment of that scenario in your unique situation.
Scholarships play a major role in the lives of LETU students. More than 90% of the student body receives financial assistance from scholarships, grants, and loans. But with graduating seniors incurring significant financial debt, it is our goal to lessen the burden and increase our scholarship aid. Endowed scholarships play a vital role in decreasing the debt burden on students.
Why do LETU alumni and friends choose to establish Endowed Scholarship Funds?
- To perpetuate the memory or legacy of a loved one;
- To honor positive role models who have significantly influenced others;
- To invest in today's students who will influence every workplace and every nation for Christ tomorrow.
Endowed Scholarships provide significant impact:
- Equip leaders for tomorrow today;
- Recruit and retain outstanding students seeking the hands-on, Christ-centered education that has for decades been the strength of LETU;
- Recognize and reward outstanding performance by students with demonstrated financial need.
Endowed professorships, chairs, programs and schools are also available. Call 903.233.3833 to establish your endowment today.
Many companies will match their employees' charitable gifts. Some will even match the donations of retirees or employees' spouses! You can make your money double or even triple and at the same time invest in students' lives.
If your company is eligible, request a matching gift form from your employer's Human Resources department. Complete, sign and send in the completed form with your gift- every time you give a gift! Inform your employer of your donation and give them LeTourneau University's mailing address (2100 S. Mobberly Ave. Longview, TX 75607) so they can make the match. We will do the rest.
Giving a cash gift isn't the only way you can support LeTourneau University students. All you have to do is sign up for all the programs below and then let your shopping do the donating. It's that easy! Your normal, everyday shopping will help the LETU Annual Fund provide scholarship aid to deserving students. Thank you!
Give by Shopping
You're going to buy things anyway, right? Here are some ways your purchase can benefit LeTourneau University.
Amazon Smile
Start your shopping at smile.amazon.com, choose LeTourneau University as your selected organization, and the AmazonSmile Foundation will donate 0.5% of the price of your eligible purchases.
Kroger
If you are a KrogerPlus member, Kroger's Community Rewards program donates a portion of your eligible purchases to the organization of your choice. Choose LETU! Visit https://www.kroger.com/topic/kroger-community-rewards-3 to enroll with your membership card and choose LeTourneau University (NPO# 84780). Don't forget to re-enroll each year to continue in the Community Rewards program.
Tom Thumb
Tom Thumb's Good Neighbor Program allows customers to direct donation dollars to a favorite church, school or other non-profit organization. Visit the courtesy booth at your local store to link your reward card to our account (use our Charity# 9090).