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A deferred charitable gift annuity provides fixed payments to you for life in exchange for your gift of cash or securities. You determine the start date of the payments, which must be deferred for at least one year after you make the gift. 

Deferred gift annuities are easy to establish and the payments you receive are backed by the general resources of Carnegie Mellon University for your lifetime.

A deferred charitable gift annuity could be right for you if:

  • You have sufficient income now, but want to supplement your cash flow later, for example, when you retire. The new - and higher - annuity rates will help ensure a comfortable retirement.
  • You want the security of fixed, dependable payments for life.
  • You want to reduce income tax or capital gains tax.
  • You would like income that may be partially tax-free.
  • You are considering a gift in an amount of $25,000 or more.


Features of Deferred Charitable Gift Annuities

A simple contract
A deferred gift annuity is a simple arrangement between you and Carnegie Mellon University that requires a one or two page agreement.  There are minimal or no costs to you to establish the arrangement depending upon the asset transferred and no costs at all to maintain it.  

Fixed payments for life, starting when you want them
In exchange for your irrevocable gift of cash, securities, or other assets, Carnegie Mellon will pay you a fixed amount of income each year for life.

  • You choose when payments start.  For example, you can specify that payments start in the year you plan to retire.
  • Once your payments start, they will last for your lifetime.  You cannot outlive your payments.
  • Payments are predictable.  Your payments will not be affected by investment performance or market conditions.  You will get the same amount each year, no matter what.
  • Payments are very secure.  They are backed by the general resources of Carnegie Mellon, not just by the assets you donate.

Tax-advantaged payments
Part of each payment to you will likely be tax-free for many years.  This tax-free portion may make your payments more valuable to you than an equal amount of fully taxable income.  Cash gifts may also increase the amount of the payment that is tax-free as opposed to gifts, stock or other appreciated property.  

Who can receive payments?
You decide who will get the payments from your gift annuity.  Usually, this will be you, or you and your spouse.  You can, however, select any one or two people to receive the payments from your gift annuity.  For example, you may wish to provide income for a child, a sibling, or a faithful employee. 

Payment amount depends on age and years until payments start
As shown in the table below, the younger you are when you make the gift and the longer you wait until your payments start, the greater the payment rate you will receive.

Sample Deferred Charitable Annuity Rates for a $25,000 gift payments begining at Age 65

Age at Gift Years Deferred Payment Rate Payment Deduction






















Tax benefits

Income tax savings 
You will earn an immediate income tax charitable deduction in the year of your gift, providing tax savings if you itemize. The amount of this deduction will depend on several factors. If you cannot use the entire deduction in one year, you may carry forward your unused deduction for up to five additional years.

Capital gains tax savings
If you establish a deferred gift annuity with appreciated property, such as stock, you will pay tax on only some of your capital gain in the property.  If you are the payment recipient of your deferred gift annuity, this capital gain will be spread out in installments over many years and will not start until the year you begin to receive payments.  In this case, your capital gain income will replace some of the tax-free portion you would receive if you had funded the annuity with cash.

Estate tax savings
By removing the gifted assets from your estate, you may also reduce future estate taxes, income tax, and probate costs.  The amount of these savings will depend on the size of your estate and on estate tax law at the time of your death.


Terrell Whitney, 55, works full time and expects to work for another 10 years or so. He owns CDs and a money market account, both of which pay about 2% interest each year.

Terrell would like to make a significant gift to Carnegie Mellon University, but he wants to be sure he has adequate cash flow after he retires. He can dramatically increase his after-tax cash flow in his retirement by giving some of his CD or money market account funds to Carnegie Mellon University in exchange for a deferred gift annuity.

The table below illustrates the results if Terrell gives $50,000 to create a deferred gift annuity that starts making payments in 10 years. In addition to earning a substantial income tax charitable deduction, Terrell is able to significantly increase his cash flow from the $50,000, and will receive an immediate income tax deduction that may provide tax savings!


Tax benefit Income before tax Income after tax (37% tax rate)

Terrell keeps $50,000 in CD/Money Market




Terrell funds a 5.5% gift annuity with payments deferred 10 years

$9,503* income tax deduction



*Deduction amount may vary depending on the timing of the gift.