Sometimes the best assets to give are the least obvious. Do you have investments that are paying low rates of return — like bonds and certificates of deposit (CDs)? You have another option that will provide you with an overall greater rate of return and tax savings. It will benefit Carnegie Mellon students, too. 

The table below illustrates a 69-year-old alum’s benefits using a $25,000 CD to make a gift to CMU to fund a charitable gift annuity.

Rate of Return Based on Plan 

ASSUMPTIONS: Cash gift of $25,000. Donor’s age is 69 years. Donor’s marginal income tax bracket is 43.4%, 39.6% for tax savings.

* Adjusted upward because tax-free portion of $900 makes the $1,250 annuity equivalent to $1,940 of taxable income for a beneficiary in the 43.4% income tax bracket.  

The rate of return of the CMU charitable gift annuity is clearly greater than the CD, made possible by a gift of the $25,000 to CMU. The gift provides the alum with an immediate charitable deduction of $9,969, an income of $1,250 annually for the rest of her/his life — and the satisfaction that CMU students will be the ultimate beneficiaries of this gift. 

If you have been thinking about how to make a gift to CMU, this gift plan offers you the added benefit of financial security, especially in uncertain times. 
 

(Rates and income payments are determined by age and the number of beneficiaries. The tax savings in the illustration will vary depending on the donor’s income tax bracket.)