MIT's Office of Gift Planning is happy to speak with you about gift annuities and charitable remainder trusts and how they can be invested alongside the MIT endowment to provide income to you and/or beneficiaries.
The MIT charitable gift annuity (CGA) is a simple contract between you and MIT, in which MIT provides a fixed annual income for one or two people for life, in exchange for a gift of $20,000 or more. Rates are based on the age(s) of the annuitant(s), and you are eligible for a partial income tax charitable deduction in the year the gift is made. The remainder of your gift becomes available to MIT for the specific purpose you have chosen.
Is a gift annuity right for you?
A CGA is an irrevocable gift, best suited to donors wishing to support MIT and receive income. Annuitants must be at least 50 years old at the time payments begin.
What assets can be used to fund an annuity?
You can use cash, securities, or a combination to fund your gift. With a gift of appreciated securities, you will avoid the up-front capital gains tax when you establish your gift.
What are the choices for annuity income?
You have three options for annuity payments: immediate; deferred to a specific date; or flexible-deferred, in which you can give now and decide later when to initiate payments.
Charitable Remainder Trusts
A charitable remainder trust (CRT) enables you to meet financial goals and charitable aspirations.
A CRT is a gift arrangement in which you make an irrevocable gift of $100,000 or more into a trust, and establish income for yourself and/or other beneficiaries. At the end of the trust’s term, the remainder becomes available to MIT, for the purpose you have selected.
Funding a CRT
You can give cash, appreciated securities, real property, closely held stock, or any combination of these to create your CRT.
Two types of tax benefits
CRT donors qualify for an income tax deduction in the year of their gift, and avoid capital gains tax on the appreciated assets gifted to the trust.
Choose the CRT that meets your income needs
Unitrust (CRUT). Payments to the donor and/or beneficiaries are equal to 5% of the trust value, determined annually. Once your trust is established, you can add to it with gifts of any amount.
Annuity Trust (CRAT). Provides fixed payments to the donor and/or beneficiaries for the life of the trust.
Choose your investment strategy
Donors may invest their CRT alongside the MIT endowment and share the benefits of its strong long-term performance and diverse portfolio, or they may opt for traditional trust investment with a portfolio tailored specifically to CRTs. All trusts are managed by the MIT Investment Management Company (MITIMCo), a division of MIT.
Investing alongside the MIT Endowment
Investing a charitable remainder trust alongside MIT’s endowment is a unique giving opportunity for donors who want to support the Institute, while benefiting from the growth, diversified portfolio, and low-cost management of a large endowment. The MIT endowment and a CRT share the visionary goals of providing income now while ensuring future financial support for MIT’s mission.
The scope of an institutional investment portfolio
Pool A, MIT's primary investment pool, is currently invested primarily in equities and heavily weighted toward private equity, real estate, and marketable alternatives, with the goal of maximizing total return relative to appropriate risk. For many CRT donors, the opportunity to access assets commonly unavailable to the individual investor, such as venture capital and hedge funds, is especially appealing.
The MIT endowment, including Pool A, is managed by the MIT Investment Management Company (MITIMCo), a division of MIT. Under MITIMCo’s disciplined management, the MIT endowment has grown to be the sixth-largest university endowment in the US (as of December 2015). The MIT Office of Gift Planning provides donors and trust beneficiaries with top-quality service for the lifetime of their trust, including delivery of payments and tax documentation.
A CRUT invested alongside Pool A
The trust illustrated below was established in 2010 with a gift of $100,000 and is providing 5% annual payments for the lifetimes of the donors. Payments from a CRUT may fluctuate depending on fund performance, and past performance is no guarantee of future results. We encourage you to discuss this giving option with your advisors to determine if a CRUT may be right for you.
See How These Gifts Can Work For You
The above information is not intended to provide legal, tax, or financial advice.