The University of Alberta is excited to offer supporters a new way to benefit themselves as well as the university through a charitable gift annuity.
Charitable gift annuities allow you to support the University of Alberta while guaranteeing yourself and loved ones a fixed income for life. A charitable gift annuity is a contract specifying that, in exchange for an irrevocable gift of cash and/or publicly-traded securities, the University of Alberta will make fixed, guaranteed payments to you or your beneficiaries for life or over a fixed term. This income is either tax-free or largely tax-free. Generally, the charitable portion will be between 25 and 30 per cent of the total contribution.
Note: The University of Alberta has set a minimum age of 65 and a minimum contribution of $25,000 for charitable gift annuities.
Example (for illustrative purposes representing donor residing in Alberta)
Irene Milllar, ’60 BEd, contributes $50,000 for a charitable gift annuity. The cost of the annuity is $37,500. Her rate of return on the annuity is 6.5%.
By contributing $50,000 for a charitable gift annuity, Irene will
- Receive annual payments of $3,250 for the rest of her life, $3,152.26 of which will be tax-free
- Receive a charitable receipt of $12,500
- Receive a tax credit of $6,250
Because charitable gift annuities may be new to you, we answer some of the most frequently asked questions. We think you will be impressed by the many advantages a charitable gift annuity offers.
How does a charitable gift annuity work?
In return for your contribution, and pursuant to a signed agreement, the university agrees to make payments to you and/or another person for life.
Are the payments guaranteed?
Yes, the university will use a portion of your contribution to purchase from a highly rated insurance company an annuity that will pay the promised amount. Your payments are backed by the very considerable assets of the insurance company.
How does a charitable gift annuity benefit the university?
The portion of your contribution in excess of the amount required to guarantee your payments is retained by the university and used for the purpose you designate, which could be for a particular faculty or program or for a named endowment, if it meets the minimum requirements for a charitable gift annuity.
How is the amount of the payments determined?
The amount depends on the age of you and/or the age of any other beneficiary of the payments at the time you establish the charitable gift annuity.
Can the payments continue to be made to someone else – for example, a spouse – who survives me?
Yes, it is common for couples to have payments made for as long as either is alive. The amount the survivor receives is not diminished.
Are there any tax benefits?
All, or a substantial portion of your payments, will be tax-free. You will receive a donation receipt, which will usually be 25% to 30% of your contribution.
Are there any minimum requirements for a charitable gift annuity?
You must be a resident of Canada, and you and/or any other beneficiary must be at least age 65. The minimum contribution for a charitable gift annuity is $25,000.