Deferred Charitable Gift Annuity

A deferred charitable gift annuity provides fixed payments for life in exchange for a gift of cash or securities. The payments start on a date that is at least one year after the date of the gift.

Deferred gift annuities are easy to set up and backed by the general resources of Williams College. 

deferred charitable gift annuity could be right for you if:

  • You want to make a generous gift to Williams.
  • You have sufficient income now but want to supplement your cash flow later, for example, when you retire. 
  • You want the security of fixed, dependable payments for life for you, your spouse, or other loved one.
  • You want to save income taxes or capital gains taxes.
  • You would like income that is partially tax-free.
  • You are considering a gift amount of $15,000 or more.
  • You (and/or the beneficiary you choose) are at least 60 years of age when annuity payments begin.
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A simple contract
A deferred gift annuity is a simple arrangement between you and Williams College that requires a one or two page agreement.  You will incur minimal or no costs to establish the arrangement and no costs at all to maintain it.  

Irrevocable gift 
A deferred gift annuity is an irrevocable arrangement. Once you transfer assets in exchange for the deferred gift annuity, you cannot change your mind and get the assets back. This requirement assures that whatever is left of your gift when the deferred gift annuity ends will go to support Williams.

Fixed payments for life, starting when you want them
In exchange for your irrevocable gift of cash, securities, or other assets, Williams will pay a fixed amount 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 Williams, not just by the assets you donate.

Tax-advantaged payments
Typically, part of each payment will be tax-free for many years. This tax-free portion makes your payments more valuable than an equal amount of fully taxable income.  

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. Alternatively, you can select one or two other 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 older you are when you start receiving payments and the longer you wait to start your payments, the greater the payment rate you will receive. If you choose other people to receive the payments from your deferred gift annuity, their ages when they start receiving payments will determine their payment rate. As with all charitable gift annuities from Williams, the beneficiaries must be at least 60 years old at the time they begin receiving payments.

Sample deferred annuity rates for a $15,000 gift

Age at Gift Years Deferred Payment Rate Payment Deduction


























Tax benefits

Income tax savings 
You will earn an immediate federal 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. Contact the Gift Planning Office to learn more.

Capital gains tax savings
If you give appreciated property, such as stock, to create a deferred gift annuity, you will pay tax on only some of your capital gain in the property. Even better, if you are the payment recipient of your deferred gift annuity, this capital gain will be spread out in installments over many years and won't 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 were to give cash.

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


David James, 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.

David would like to make a significant gift to Williams College, 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 Williams College in exchange for a deferred gift annuity.

The table below illustrates the results if David gives $50,000 to create a deferred gift annuity that starts making payments in 10 years. David 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)

David keeps $50,000 in CD/Money Market




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

$15,644* income tax deduction



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


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