For more than 125 years, Pomona College has offered charitable gift annuities (CGAs) that provide donors with reliable lifetime income while supporting the college's educational mission. Pomona has been widely praised for its pioneering planned giving options – Forbes magazine recently declared that the Pomona Plan “has made CGAs into an art form.” 

Jump to: What Is a Charitable Gift Annuity? | Is It Right for You? | Calculate Your Rate | How It Works | Tax Benefits | Best Assets to Use | Real-World Example | Let’s Talk

What Is a Charitable Gift Annuity?

A charitable gift annuity is a planned giving arrangement in which you transfer assets such as cash or appreciated stock to a nonprofit organization like Pomona College in exchange for fixed payments for life. The remaining value at the end of the annuity becomes a charitable gift to the organization. Charitable gift annuities are one of the most trusted planned giving vehicles in the United States.

Pomona College has one of the longest-running charitable gift annuity programs in the United States, offering its first such agreement in 1892 and establishing the Pomona Plan during World War II. 

Is a Pomona Plan Charitable Gift Annuity Right for You?

A Pomona Plan CGA may be the right fit if you want to:

• Increase or protect reliable cash flow with fixed lifetime payments
• Reduce your tax burden through income tax and capital gains savings
• Receive partially tax-free income with each payment
• Diversify out of appreciated securities while minimizing capital gains exposure
• Fund a gift of $25,000 or more, and you (or your co-annuitant) are at least 60
• Make a lasting gift that supports future Pomona students
   

How Does a Charitable Gift Annuity Work?

A charitable gift annuity is a one- or two-page contract between you and Pomona College — with no hidden fees or ongoing administrative costs.

1. You make an irrevocable gift. Transfer cash, appreciated securities, or other eligible assets to Pomona. In return, you receive guaranteed fixed payments for life.
2. Pomona pays you — for life. Your payment is fixed at the outset of the agreement and never changes, regardless of market conditions. Payments are backed by the full financial resources of Pomona College, not just the assets you donate.
3. You name up to two beneficiaries. Most donors name themselves, or themselves and a spouse. You may also designate another person, such as a parent, sibling, or longtime employee. The minimum age for any recipient is 60.
4. Your legacy supports Pomona College students for generations to come. At the end of the annuity, the remaining value allows talented young people from all backgrounds to access a world-class liberal arts education.

Tax Benefits

A portion of each CGA payment is typically tax-free for many years — often making annuity income more valuable than an equivalent amount of fully taxable income.

Immediate charitable income tax deduction. You receive a federal income tax deduction in the year of your gift, based on the current value of the charitable remainder. Any unused deduction can be carried forward for up to five years.

Capital gains tax savings. When you fund your annuity with appreciated securities, you only realize a portion of the capital gains, and the tax on these gains is typically spread over your payment period.

Estate and probate savings. Removing assets from your taxable estate through a charitable gift annuity may reduce future estate taxes and probate costs, depending on your situation and relevant law.

Best Assets To Fund Your Gift

Cash and low-yield accounts. Savings and money market accounts often earn very little. When you invest the same amount in a charitable gift annuity, you may receive significantly higher fixed payments. 

Appreciated stock and securities. If you fund a CGA with long-held stock, you can unlock value, increase cash flow, and reduce or defer capital gains.

Real-World Example: Converting Appreciated Stock Into Increased Retirement Income

George is a 71-year-old who supports his retirement with investment income, including a stock that he purchased for $3,000 many years ago. The stock is now worth $100,000  — however, it generates only about $1,260 in after-tax income annually. 

If George sells the stock, he faces roughly $19,400 in capital gains tax, leaving just $80,600 to reinvest. By funding a Pomona Plan gift annuity with that stock, he can sharply increase his income and reduce his tax bill.
 

*Deduction amount and capital gains tax avoided may vary depending on the timing of the gift.

For educational purposes only; not tax advice. Deduction and capital gains tax avoided vary with timing.

Let’s Talk About Your Retirement Picture

Find out what a Pomona Plan charitable gift annuity could pay you and how much it could save you in taxes. Our planned giving team can walk you through a free, personalized illustration and answer any questions you may have. You can reach us at 1-800-761-9899.