Planned Giving Primer with Alexander Gross

What is a charitable gift annuity?

AG: This is an agreement between a donor and the MUHC Foundation where the Foundation commits to paying a lifetime monthly income to the donor in exchange for the donor’s gift of cash or other asset (such as securities, insurance policies or real estate). A portion of the assets transferred to the Foundation takes the form of an immediate gift to the hospital. The balance is used by the Foundation to purchase an annuity that will pay the donor a fixed monthly amount, most or all of which is tax-free. There are many variations available, making it important to get professional input to evaluate what is actually the most effective option for the donor.

Could you describe the benefits for both donors and the MUHC?

AG: Few people realize that they can support their favourite charity and at the same time increase their monthly cash flow. When an individual establishes a charitable gift annuity with the MUHC Foundation, the MUHC benefits from an immediate gift of cash. The donor benefits from a tax receipt for the gift and from monthly annuity payments that are often more attractive than fixed-income from GICs or other fixed-income securities.

How do I know if this vehicle is right for me?

AG: A charitable gift annuity is an ideal philanthropic tool for someone who is over 65 and is looking for an investment vehicle that will give them a regular income stream with a flow that’s better than that yielded by a GIC. Charitable gift annuities are particularly attractive to individuals who have holdings on which the interest is fully taxable, as well as people who are seeing part of their Old Age Security payments clawed back.

Could you walk us through the steps involved in making this type of gift?

AG: First, the donor transfers cash or another asset to the MUHC Foundation. Then, the Foundation uses a portion of that contribution to purchase an annuity from a major Canadian insurance company, generating a payment for the donor that’s guaranteed for life. The difference between the donor’s contribution and the cost of the annuity is immediately available to improve patient care, teaching and research at the MUHC, and the donor receives a one-time tax receipt for this amount. The donor will then begin receiving fixed payments on a monthly basis. The donor’s annual payment rate will depend on whether they’re male or female and what their age is at the time the gift is made. The older the age, the higher the payment.

Are there other available sources of information on charitable gift annuities?

AG: The MUHC Foundation’s website offers information on charitable gift annuities as well as other types of planned gifts that go toward supporting health care in our community. The Foundation can also provide you with a personal annuity quote based on your age and the size of the annuity that you’re interested in. Contact the MUHC Foundation offices at 514-931-5656 for more information.