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Law Briefs: Charitable Gift Annuities [GW Magazine]

by Hope Katz Gibbs
GW Magazine
Law Briefs
November 1997

FRANK NEUHAUSER, JD ’40, WAS a patent lawyer “back when they still called them that,” says the 40-year veteran of General Electric’s legal department. “I helped obtain hundreds of patents as head of the small appliances division.”

He began his career as an engineer of small appliances. But in 1938 GE needed lawyers as much as it needed engineers. The company began sending several of its employees to The George Washington University Law School to get their degrees. Neuhauser jumped at the opportunity.

“I always know a good deal when I see it,” says the 84-year-old, “and I still do.” That’s why he says he and his wife Virginia, made a gift to The George Washington University Charitable Gift Annuity program.

In exchange for transferring cash, securities or other property to GW, the University pays the Neuhausers a specific sum of money each year for the remainder of their lives. Upon their deaths, the sum will be left to the University.

“We get a double benefit by making a donation through the gift annuity program,” says Neuhauser. “We get a check every year for the rest of our lives and we get a tax deduction for making the donation. If it wasn’t for GW, I wouldn’t have had my wonderful career with GE. I liked being a lawyer much more than I liked being a engineer.”

An added benefit is that GE has a matching gifts program. Donations made by employees or retirees to their alma maters are matched annually up to $50,000 per donation. GE founded the Fund program in 1954, and has since matched more than $7 million in gifts to about 1,200 institutions of higher learning.

“Matching gifts provide a terrific incentive to provide maximum personal support to great schools,” says Gisselle Hill of GE. “Matching Gifts is the GE Fund’s fastest-growing program.”

Another donor utilizing the Charitable Gift Annuities program is Jonathan “Jack” Sloat, JD’56, general counsel from 1981-1984 to the U.S. Information Agency under George H. Bush. His claim to fame, he believes, is founding and helping to raise funds for the William H. 0. Fitzgerald Tennis Center in D.C. in 1990.

That experience got him thinking he’d like to donate some of his own money. “But I wasn’t quite sure about the logistics,” he says. When his mother died in 1992, Sloat was the executor of her will, which included several sizable donations to her alma maters.

“After receiving my mother’s donations, the schools wrote to thank me for her generosity,” he recalls. “Although I had always planned to donate money to GW, that inspired me look into ways I could do it—while I was still alive.”

Through the Charitable Gift Annuities program, he donated $10,000 to GW’s law school. “I found several good reasons to do it this way,” he says, noting that the school knows in advance it was to get a chunk of money, he gets accolades for making the donation, and he gets a higher return on his investment [about 6 percent] than if he kept the money in the stocks market [about 3 percent].

Sloat says he is so happy with his decision, he is thinking of giving another $10,000
this year. “If I put $20,000 into the gift annuity program, GW gets more and I’ll get more back annually. Everyone makes out.”

Harold L. Schilz (BA ‘24, JD ’32) also has used the Charitable Gift Annuities program to donate to the law school. He stumbled upon the idea when he saw an ad in the alumni magazine and last year invested $30,000.

“What we like best about it is that it allowed us to move an asset from our estate, which gave us a substantial federal tax deduction—one with an 11 percent return for the remainder of our lives,” Schilz concludes. “Not a bad decision for an old guy, huh?”

Benefits of a Charitable Gift Annuity

In addition to helping the GW Law School. the biggest benefit of a charitable gift annuity is guaranteed income of a regular, fixed sum paid each year for the rest of the annuitant’s life. The amount paid annually depends on the age of the donor, the size of the gift, whether the income payments begin immediately or are deferred. and whether a second person (a spouse or child) will continue to receive annuity income after the death of the donor.

Below is a table showing the benefits of a $10.000 gift annuity for one person enrolling in the program at age 60, 70 or 80. Calculations are based on one donor with quarterly annuity payments.

• Age: 60
Interest: $6.9%
Annual Payout: $690
Charitable deduction: $3,446.80

• Age: 70
Interest: 7.7%
Annual Payout: $770,000
Charitable deduction: $4,139.60

• Age: 80
Interest: 9.4%
Annual Payout: $940
Charitable deduction: $4,908.70

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