Houston Methodist Hospital Foundation

Charitable Gift Annuities:
Gifts That Give Back

Receive Income for Life and Save on Taxes

When we give, it is because we support a certain cause or mission. Not because we expect something in return. However, there are gifts that allow you to support Houston Methodist while also receiving benefits. Charitable gift annuities are gifts that give back and pay you income for life.

How It Works
When you create a gift annuity, you make a contribution of cash, appreciated securities or other appreciated property owned longer than one year to Houston Methodist. In return, you receive fixed payments for the rest of your life. The annual rate of your payment is based on your age at the time of the gift. The older you are, the higher the rate. Your payment rate does not fluctuate with the stock market, interest rates or inflation. It is firmly set at the time of your gift and never changes. After your lifetime, Houston Methodist uses the remaining balance for our work.

You can also provide payments for another individual — typically your spouse, but it could also be a parent, adult child, family member or friend. Or you can establish a two-life gift annuity that pays you and another person if you choose.

Charitable Gift Annuities

Benefits of a Charitable Gift Annuity When Funded With Cash or Appreciated Securities

  • Older annuitants (the person or people receiving the CGA payments) have higher payment rates.
  • You have potential to receive increased disposable income.
  • You may receive an income tax charitable deduction (if you itemize) in the year you set up the gift annuity.
  • Each year a portion of your payment is income tax-free, until you reach your anticipated life expectancy.
  • If you fund your gift annuity with appreciated property, rather than cash, you could benefit even more with favorable capital gains tax treatment at the time of your gift.
  • After your lifetime, the remaining portion of your gift will support our mission, helping to fulfill your philanthropic goals.

Keep Your Cash!

You can fund a charitable gift annuity with more than just cash — use securities or your IRA assets.

Perhaps you have stock that is producing lower dividends than you had planned on, or you have securities that have turned out to be more risky than you are currently comfortable with. You can exchange those for a secure, stable gift annuity and maintain day-to-day financial security and minimize capital gains tax. Talk with us or your financial advisor about creative options for funding a gift annuity.

If you are 70½ or older, you can use your IRA to create a gift annuity. Get fixed, reliable income for life by making a one-time election of up to $53,000 — without being taxed on the IRA distribution! This option comes with special rules, so contact us to discuss whether this is right for you.

Charitable Gift Annuities

An Example

Our donor, age 75, plans to donate stock worth $25,000 to Houston Methodist. Because they need continuing income, they decide to give the stock in exchange for a one-life charitable gift annuity at the suggested rate of 7.0%, or $1,750 per year.

Because our donor itemizes their tax deductions, they qualify for a federal income tax charitable deduction of $10,379* (the amount of the $25,000 donation attributable to the gift portion). With a marginal income tax bracket of 32%, the tax savings of $3,321 reduces the net cost of the gift to $21,679.

In the chart you will see recommended rates from the American Council on Gift Annuities, which most nonprofit organizations follow. Check with our representative for current rates and applicable ages for charitable gift annuity eligibility.

One Recipient
Age Rate
60 5.2%
65 5.7%
70 6.3%
75 7.0%
80 8.1%
85 9.1%
90+ 10.1%
Two Recipients
Ages Rate
60/65 4.8%
65/70 5.2%
70/75 5.8%
75/80 6.5%
80/85 7.3%
85/90 8.7%
90/95 9.9%

*Based on a 5.2% charitable midterm federal rate. Deductions and calculations will vary depending on your personal circumstances.

Charitable Gift Annuities

Next Steps

We want to work with you to create a gift that best fits your circumstances and our needs. To learn more about the benefits of establishing a charitable gift annuity with Houston Methodist, please contact us today.

Shulmith “Shu” Muthyala
Director - Annual & Planned Giving
Phone: 713.254.9011
6565 Fannin Street, SS2
Houston, TX 77030

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Charitable Gift Annuities: Gifts That Give Back

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