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Charitable Gift Annuity:
This is both a gift to the The American Red Cross and an annuity that provides income annually for a donor or recipient of the annuity while the donor or recipients are still alive. A donor transfer of $1,000 or more in cash or securities to the Red Cross can provide a source of guaranteed income for life. When the recipient of the annuity is no longer living, the invested contribution becomes a gift to the Red Cross.
The American Red Cross has been offering Charitable Gift Annuities since 1980. The program is nationally administered through the National Headquarters Gift Planning Unit and the Shared Services Center.
The legal status of the American Red Cross as a unique federal instrumentality and charitable corporation has been confirmed by a unanimous decision of the United States Supreme Court in Department of Employment v. United States, 385 U.S. 355 (1966). In this case, the Court found that the Red Cross is exempt from certain state and local taxes, as well as other obligations imposed by state or local law. Due to this exemption, the American Red Cross does not adhere to the various state registration requirements for the operations of its chapters and blood regions across the country or for the administration of a Charitable Gift Annuity program. Chapters, blood regions or other operating units MUST not register with any state office or establish their own charitable gift annuity program.
Current and Deferred Annuities
American Red Cross will accept current Charitable Gift Annuities (CGAs) which begin payments within one year of the gift date, as well as deferred charitable gift annuities, which the initial payment is at least one year after the gift date. (Annuitant(s) must be at least 65 years of age to receive annuity payments. If the annuity is for two lives, both annuitants must be 65 years of age to receive payments.) The deferral period will be at the discretion of the donor, but must be at least one year. ARC will accept annuity gifts for one life, two lives in succession or joint and survivor annuity agreements. Charitable Gift Annuity agreements will be limited to one or two lives in existence at the time of the gift.
Application
All gift annuitants must submit a signed charitable gift annuity application with a copy of proof of age. Age may be proven with a birth certificate, valid driver′s license, state issued identification card or passport, and a copy of one of these documents must be submitted with the application.
Contract
The Gift Planning Unit will prepare the contract and either work directly with the donor or with the local chapter to get it executed. Once a charitable gift annuity is completely executed, the donor will receive a signed and sealed contract from the American National Red Cross.
Signature and Approval Authority
The Chief Development Officer delegates signature and approval authority to the National Headquarters Vice President of Development and National Headquarters Director of Gift Planning. Documentation of delegation must be retained by the Gift Planning unit to facilitate any subsequent auditing requirements. The charitable gift annuity contract will be signed on behalf of the American Red Cross by the National Headquarters Director of Gift Planning (all supervisors above the level of National Headquarters Director of Gift Planning also have signature authority.)
Disclosure Statement
The donor will receive a Charitable Gift Annuity Disclosure Statement, which must be discussed and provided to the donor during the application process. Contact the Gift Planning unit for a copy of the Charitable Gift Annuity Disclosure Statement.
Designation
The donor may designate a chapter or blood region of the American Red Cross, the National Headquarters, or some combination of chapters, regions and National Headquarters, as residual beneficiary(ies) of the charitable gift annuity. The donor may also choose to designate a fund of the American Red Cross such the Endowment Fund, the Disaster Relief Fund or the International Response Fund. The donor may not change the designation once the CGA contract has been executed.
Irrevocable Nature of Gift
The donor or donors should acknowledge their understanding that the gift is irrevocable. The irrevocable nature of the gift is what qualifies it for a charitable deduction. The donor may not seek to change or terminate the CGA once the contract has been executed.
Annuity Rates
The maximum annuity rates offered will always be the American Council on Gift Annuities (ACGA) suggested rate. In the case of Deferred Charitable Gift Annuities, we will use the current Uniform Interest Factors. To conform to the federally mandated “Clay Brown Rule” the annuity rate offered will generate a charitable deduction of more than ten percent (10%) of the fair market value of the assets given, or the annuity rate will be reduced to qualify for the deduction.
American Red Cross will always offer the maximum annuity rate to each potential donor/annuitant, based on the actuarial age of the annuitants. A donor/annuitant may not choose a higher annuity rate than recommended by the ACGA, but donor/annuitant may choose a lower rate.
Minimum amount
The minimum acceptable gift amount is:
One Life: $5,000
Two Lives: $5,000
Deferred Charitable Gift Annuity: $5,000
Subsequent contributions: $1,000
Minimum Age
The minimum actuarial age of an income recipient(s) on the date payments start is 65. The American Red Cross does not offer Education Gift Annuities, where payments are to start by age 18.
Charitable deduction
In calculating the deduction, a donor may elect to use the discount rate (the discount rate, or AFR equals 120% of the annual mid-term applicable federal rate, rounded to the nearest 0.2%) for the month the gift is made. Alternatively, a donor may elect to use the discount rates for either of the two months immediately proceeding the month of the gift. Those donors who prefer more tax-free income should elect the lowest allowable discount rate. This will result in a smaller charitable deduction. Those donors who prefer a larger charitable deduction should use the highest allowable discount rate. The Gift Planning Officer should complete the discount rate election form if a donor makes an alternative election. Contact the Gift Planning Unit for a copy of this form.
Date of Gift
The charitable gift annuity will be effective on the date of the gift.
If the donor gives cash, a check or stock certificate to an American Red Cross representative to fund a charitable gift annuity, the date of the gift is the date the donor physically delivers the cash, check or stock certificate to an American Red Cross representative.
If the donor mails cash, check or properly endorsed securities (or stock certificates along with a stock power) to the American Red Cross, the date of gift is the US postmark date or the date on the Federal Express or UPS documented receipt. Contact the Gift Planning Unit for a stock power form.
If the donor electronically transfers (or instructs his/her broker to electronically transfer securities) to the American Red Cross account, the date of the gift is the date the securities are received into a Red Cross account.
If the donor has securities re-issued in the name of the American Red Cross, the date of the gift is the date the securities are transferred to the name of the American Red Cross (usually the date on the stock certificate.)
Multiple Gift Dates
If the assets used to fund CGAs are officially transferred on different days, the date of transfer of the LAST asset is used as the gift date for the entire gift. If the donor prefers, the donor may choose to establish two CGAs with different gift dates provided each CGA conforms to the contract minimums discussed above.
Valuation
Securities are valued as the average of the high and low price of the security on the date of gift.
Annuity Payments
The donor selects the payment schedule he/she desires: quarterly, semi-annually or annually. Monthly payments are available, but not encouraged. Initial payments will be prorated based upon the gift date. Once the contract is executed, the donor may NOT change the payment schedule to be more frequent than initially elected.
Assets to fund a CGA
The American Red Cross will accept cash and marketable securities and mutual funds to fund CGAs. (It is preferable that the donor use long-term capital gain property held for at least one year and one day.) The American Red Cross will not accept real estate to fund a CGA.
Electronic Deposits of Annuity Payments
The donor selects the method of receipt of annuity payments, either by mail or electronically deposited into the donor’s bank account. Annuity payments will be mailed or processed in time to arrive on the payment due date. It will take fifteen working days to establish electronic deposits. If a donor prefers electronic deposit, the donor must submit a voided check and complete and sign an Authorization for Direct Deposit Form. Contact the Gift Planning Unit for a copy of this form.
Investment of the Charitable Gift Annuity Fund
All funds transferred to the American Red Cross for a charitable gift annuity will be transferred to a selected vendor and invested in the American Red Cross Charitable Gift Annuity Fund. The vendor will invest the assets in accordance with the general investment guidelines as set forth by the American Red Cross. Information regarding Red Cross’ investments for CGAs may be found on our vendor′s website at www.kaspick.com.
Tax Forms
The donor will receive a 1099-R form from the American Red Cross annually. The American Red Cross is required by law will have the 1099-R form prepared and mailed to meet the deadline of January 31st each year. At the time of creating the CGA, the donor must supply cost basis and acquisition dates in order for the American Red Cross to accurately report on the 1099-R form.
The Shared Services Center manages the financial information about CGAs and will provide participating chapters, blood regions and National Headquarters with information to properly record the organization’s interest in CGAs.
American Council on Gift Annuities
The American Red Cross maintains a membership and is actively involved with the American Council on Gift Annuities in order to be aware of changes in rulings, regulations and administrative issues connected with administering a Gift Annuity Fund and program.
Questions Regarding Charitable Gift Annuities
Please contact Joni Hatch, CEO at 269-962-7528 extension 223.
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