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Income Generation

The following are examples of how individual supporters have created income for themselves or their families while supporting Perkins.

I Want to Create Income ...

For Myself:

Charitable Gift Annuity:

Support Perkins and increase your annual income with a charitable gift annuity. By donating appreciated stock, you will minimize capital gains tax and lock in a fixed rate of return that is often higher than you are currently receiving from low interest-bearing accounts like certificates of deposit, money market accounts, or treasury notes. Rates are based on age and range from 5.0 percent for age 60 (the minimum age) to 9.5 percent for ages 90 and above.

Example:
"Frank established several charitable gift annuities with Perkins. He increased his income by converting low-yielding treasury notes into charitable gift annuities and it was easy to do. Frank says: 'It gives you a guaranteed income. I think its very good.'"

Charitable Remainder Trust:

Another way to support Perkins while adding to your income is the charitable remainder trust.

Example:
Jay and Viviana are newly retired and would like to downsize from their existing home. By reducing home maintenance responsibilities, they will gain additional time for more leisure activities like traveling. They decided to place their home into a charitable remainder trust. The trustee sells the house, reinvests the proceeds in a diverse portfolio of liquid assets, and pays Jay and Viviana a stream of income for life. Jay and Viviana turned an undesirable asset into an income producing asset and received a charitable income tax deduction for a portion of their home’s value. Upon their deaths, the remaining trust principal will benefit Perkins.

For My Retirement:

Charitable Gift Annuity:

Example:
Not satisfied with the low rates from her certificates of deposit and not happy about the time she spends searching for the best rate when her CDs mature, Nancy concluded that funding a charitable gift annuity with her CDs was the answer. At age 79, she receives a 6.9% annual rate of return – a rate guaranteed never to change – and a charitable income tax deduction. With dependable quarterly deposits into her checking account, she no longer concerns herself with searching for the “best” rate.

Deferred Charitable Gift Annuity:

Example:
William, age 51, wanted to thank Perkins for the educational experience provided to his son at Perkins and also wanted to provide future security for his wife, Elaine, age 48. Using low basis, highly appreciated stock, William funded a deferred charitable gift annuity that will give Elaine a guaranteed fixed income in her retirement years of 12.2% annually. In addition to receiving a charitable income tax deduction now, William and Elaine have the satisfaction of knowing they are leaving a significant legacy that will enable Perkins to help other children like their son.

For A Parent:

Charitable Gift Annuity:

Example:
Victoria has worked hard and is doing well in her career. Now that she has a steady income, she would like to make a gift to Perkins who has helped her mother but wants also to provide for the financial security of her mother.

Victoria decided to establish a charitable gift annuity with income directed to her mother. The amount of income her mother receives is based on her mother's age at the time of the gift annuity. Victoria can claim a charitable tax deduction in the year she funds the gift, which is helpful as she is in a high income tax bracket. (Only a portion of the gift is deductible, since it is only partially charitable.) Because Victoria is making a gift to her mother of the income stream, she may be able to use her annual gift tax exclusion to avoid any gift tax liability that may arise.

For A Child or Grandchild:

Charitable Remainder Trust:

Example:
Angela and Darryl want to provide for their new grandchild’s college education and make a gift to Perkins. A charitable remainder trust funded with appreciated securities can help them accomplish their objective, while also reducing their taxable estate which will benefit all of their heirs.

Here is how the Charitable Remainder Trust for a term of years works:

Angela and Darryl donate $150,000 and claim a charitable tax deduction of approximately $50,000. The trustee sells the stock in the trust with no capital gains tax ramifications for Angela and Darryl. The trustee also invests for growth of principal during the first 16 years and directs a 6% payout for the last four years, when the grandchild is in college. At the end of the trust term (when grandchild turns 22), the remaining principal will pass to Perkins to create an endowed fund.

For Charity:

Charitable Lead Trust:

Example:
Martha established an endowed fund for Perkins several years ago. Her intent was to continue adding to the endowed fund until she reached a certain dollar goal. However, she also wanted to leave a certain amount to her nieces and nephews.

Martha decided that the charitable lead trust would accomplish both of her goals. She placed appreciated stock held for more than one year in a charitable lead trust that provides a current stream of income to Perkins for ten years. At the end of the ten years, the trust principal and all of its growth will pass to her family.

The school adds the income stream from the charitable lead trust to Martha’s endowed fund at Perkins. The income from the endowed fund is used to support Perkins’ programs today.

When Martha established her lead trust, no gift tax was due because the future gift to her family fell beneath the gift exemption level, thus no out-of-pocket cost to Martha. Perkins will receive income for ten years and all appreciation in the trust will pass to Martha’s heirs with no additional tax due.

I Want to Pass Assets to my Heirs Tax-Free:

Charitable Lead Trust:

Example:
Nicholas and Joanne own a business with a cash flow of $1 million – a business that they plan on leaving to their children. They fund a charitable lead trust with the business property, designating that Perkins and another charity split 5% of the initial value ($50,000) each year for ten years.

Since the business easily produces $50,000 in income, the property does not need to be sold for reinvestment. No gift tax was due at the time the trust was created because the future gift to their children falls beneath the gift tax exemption level.

At the end of 10 years, Perkins and the other charity have each received $250,000, and the property, expected to be worth more than $1 million, passes to their children with no additional tax due.

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