Income Producing Gifts - Gift Annuities


Using a Seton Hall Charitable Annuity to Secure the Future

A Charitable Gift Annuity is a vehicle that allows a donor to make a long-term contribution to Seton Hall Law School, while still securing a stable stream of income. It is a contractual promise issued by The Law School to pay a fixed dollar amount for a donor’s lifetime. This contract is issued in exchange for a contribution and promise of the remainder to be designated irrevocably to Seton Hall Law.

Some important principles to consider are that these contributions are irrevocable, and provide a tax deduction during the year they are funded. Gift annuity vehicles are versatile in that they can be made as a present agreement, deferred, or even made part of an estate plan.

For most donors, using a Charitable Gift Annuity will allow them to shift investments and receive a reliable income stream. If the annuity is funded with appreciated assets, it permits capital gains to be distributed over a term of years. For Seton Hall Law, it provides the knowledge that future funds will be available, and reinforces your belief and commitment in our mission. However, it is important to consider this vehicle will not allow for the current use of funds.

Gift annuity contracts are made between a donor and the Law School, and can be made to one or two annuitants. The minimum age for participation is 65 years of age (55 for a deferred annuity), and the initial funding amount must be at least $10,000. The date of the first payment may be delayed or deferred up to a certain point in order to enhance the interest rate. For illustrative purposes, we have included two examples for an annuity gift of $50,000 made by a 72-year-old donor to Seton Hall Law, by way of cash and appreciated stock. In this example the annuity rate is 5.4%, however please note: Gift Annuity rates vary, so contact our team for specifics that would apply to you.

For a cash gift, the donor would be entitled to a charitable deduction of $21,197.50. Based on the donor's life expectancy, they would receive annuity payments of $2,700 for 14.5 years, with the remainder going to Seton Hall Law at the donor’s death. When funding with cash, a large portion of this annuity would be received tax-free. This is a great option for retirement planning with bonus or commissions.

Charitable Deduction $21,197.50
Annuity $2,700.00
Tax-free Portion $1,987.20
Ordinary Income $712.80

For a gift of appreciated stock, the analysis is slightly different. The Charitable deduction and annuity payment remain the same. However, since we have funded the annuity with appreciated assets, we need to account for the capital gain. This will now be included as part of the payment and spread out over the life of the contract. For this calculation we have assumed a 50% cost basis in the asset, and are assuming it was held for more than one year. The annual annuity payment will still amount to $2,700.00 but now the proceeds will be recognized for tax purposes as follows:

Charitable Deduction $21,197.50
Annuity $2,700.00
Tax-free Portion $993.60
Capital Gain Income $993.60
Ordinary Income $712.80

There are numerous reasons why an income producing gift may be a great tool in your philanthropic arsenal. Each vehicle and situation is unique to the donor and their particular goals. We encourage you to contact our team and see if an income-producing gift makes sense for your plans. For this or any other non-cash philanthropic vehicles, please contact Assistant Dean for Alumni & Development Keith W. Cook at [email protected] or call us at 973-642-8711.

Office of Alumni Development & External Relations
[email protected] | 973-642-8711