MAKING YOUR DOLLARS MAKE SENSE
Editors’ note: Despite the down economy, Cal Poly alumni and friends continue to find ways to support the university. This series will focus on creative ways our donors can benefit both the campus and themselves.
The Gift that Keeps on Giving
Many people say Cal Poly has given them so much and now they want to give back, but they don’t consider themselves wealthy and need their savings to last through what could be decades of retirement.
That’s where a Charitable Gift Annuity (CGA) can make sense.
A CGA is an all-purpose giving vehicle in which a donor gets an immediate tax write-off and a lifetime income stream. Depending on the age of the donor, the current rate of return can be as high as 9.5 percent, and at least part of the annual income from the annuity is tax free.
The typical donation is usually between $10,000 and $50,000. Prior to the gift being funded, the rate of return is determined by the donor’s age and the age at which he or she decides to start taking distributions. The longer the distribution is deferred, the higher the rate. The rate is fixed, and distributions continue throughout the life of the donor.
Sound too good to be true? We talked to Charles Dana, a computer science professor emeritus who likes CGAs so much he’s funded several since he retired at age 51.
“It feels more like an investment than a donation,” he said. “Since I get money back, I can make bigger gifts.”
Dana funded his first CGA at age 53, followed by five more over the next five years. He will start receiving distributions from the first CGA at 65. He “laddered” the maturity dates (the age at which he starts to receive distributions from each respective CGA), so his income will go up each year after that to combat what he calls “the notion that I’m on a fixed income.”
“I retired on the early side,” he said, “and I wanted to make sure I didn’t live longer than my resources.”
He also likes the idea of being able to honor his parents, who were educators. “They always put more into the job than they took out of it,” he said. By making this gift, he is following in their footsteps, giving back to the department that provided him such a rewarding career.
For more information on how a Charitable Gift Annuity can work for you and Cal Poly, contact Stacy Cannon at (805) 756-2993 or cscannon@calpoly.edu.
