Charitable Gift Annuity

A charitable gift annuity enables you to make a gift to San Francisco Ballet’s future and at the same time receive a guaranteed, fixed annual income during your lifetime. Gift annuities are a popular option for people who like the security of a predictable income and who want to make a significant gift to charity.

A gift annuity is established through a simple, two-page contract between you and the San Francisco Ballet Endowment Foundation. In exchange for your irrevocable gift of cash or stock, the Ballet Endowment Foundation promises to pay you an annual income for life. The amount of income is fixed at the time of your gift and will not fluctuate with the economy. In addition, the annuity is guaranteed and backed by all of the resources of the Ballet’s endowment. When you pass away, your income payments will cease and the remainder of your gift will be added to the Ballet’s endowment, where it will be invested and used to support San Francisco Ballet in perpetuity.

How is the amount of annuity income determined?

Your annuity income is based on your age and the size of your gift. Your age determines the “payout rate” of your gift. The older you are when you make your gift, the higher the payout rate. For example, if you are 65, the rate is 5.3%, meaning that a gift of $10,000 would provide you with an annual income of $530, while a gift of $20,000 would provide $1,060. If you are 75, the rate is 6.5%, or $650 annually for a $10,000 gift. At 85, the rate is 8.4%, or $840 annually for a $10,000 gift.

San Francisco Ballet Endowment Foundation, like most charities, uses the annuity rates recommended by the American Council on Gift Annuities. The Council’s rates are lower than commercial annuity rates offered by insurance companies, and are created to provide an attractive income to the beneficiary and at the same time preserve a generous gift for charity.

What are the benefits of a gift annuity?
There are two primary financial benefits for the donor. First, you receive a guaranteed annual income, paid to you in quarterly installments. You may find the taxation of your income to be favorable. If you make a gift of cash, a large part of your annual annuity income will be considered tax-free. For gifts of appreciated stock, part of your income may be tax-free, while part will be taxable at the capital gains rate. The taxation is based on several factors and is especially variable for gifts of stock. The Ballet will be happy to provide more specific information related to your potential gift.

Second, you can claim an immediate charitable income tax deduction for a portion of your gift. The allowable deduction represents the present value of the amount of your gift that is expected ultimately to benefit the Ballet Endowment Foundation. The exact amount is determined by such factors as your age and annuity income. In general, gift annuities established at the Ballet will allow you a charitable deduction equal to 30-50% of your donation. If you are unable to use your deduction immediately, you may carry it forward for up to five years.

In addition to the financial benefits, a charitable gift annuity gives you the satisfaction of knowing that you have made a generous gift to support the future of San Francisco Ballet, a local treasure and internationally acclaimed ballet company.

Can a gift annuity benefit someone other than the donor?
You can name another person as the income beneficiary of your gift. In this case, the income and charitable deduction would be based on his or her age at the time of gift. You may also establish a gift annuity that provides income to two people, such as yourself and one other person. The income and deduction would be based on the ages of both beneficiaries and would be lower than in a single-beneficiary situation. Naming someone other than yourself  or your spouse as an income beneficiary may alter the tax benefits of a gift, and may result in a gift tax. The Ballet can provide additional information if you are considering this option.

Are there additional matters to consider?
The minimum gift required to establish a charitable gift annuity at San Francisco Ballet Endowment Foundation is $10,000. It is not possible to add to gift annuities, but donors may establish additional gift annuities in the future.

A gift annuity can be established for an income beneficiary who is 65 years of age or more. If you are too young for a current annuity, or if you don’t need income immediately, you may consider a deferred payment gift annuity. This option allows you to make a gift now but elect to receive income payments beginning at a future date. The deferral of payments increases both your future annuity payout rate and your current charitable income tax deduction. The Ballet can provide an illustration of how this might work for you.

San Francisco Ballet encourages you to speak with your financial and tax advisors before making a gift. Each donor’s situation is unique, and only your own personal advisors can determine the consequences of your donation. The Ballet cannot offer professional advice. Of course, the Ballet is happy to answer any questions you have and would enjoy the opportunity to work with you and your advisors as you consider a gift.

For an illustration of how a gift annuity could benefit you or a loved one, please contact Elizabeth Lani, the Ballet’s planned giving manager, at 415.865.6623 or legacycircle@sfballet.org.