The Deferred Charitable Gift Annuity Calculator is a financial tool designed to determine the present value of an initial charitable contribution based on future annuity payments, discount rates, and the number of years until the annuity payments begin. It's an essential aid for individuals and organizations planning charitable donations with a deferred payout structure.
Formula of Deferred Charitable Gift Annuity Calculator
The formula used for the Deferred Charitable Gift Annuity Calculator is:
P = A / (1+r)n
Where:
- P is the present value (the initial charitable contribution).
- A is the future annuity payment.
- r is the discount rate or expected rate of return.
- n is the number of years until the annuity payments begin.
This formula helps in calculating the initial amount to be donated to achieve a specific future annuity payment considering the discount rate and the duration until the annuity starts.
General Terms Table
Below is a helpful table of general terms and relevant information that people commonly search for:
| Term | Description |
|---|---|
| Present Value | Initial charitable contribution amount |
| Future Payment | Planned or expected annuity payment in the future |
| Discount Rate | Expected rate of return on the investment |
| Years | Duration until the annuity payments begin |
| Annuity | Regular payment received, usually yearly |
| Deferred Annuity | Annuity payments that begin at a future date |
| Charitable Gift | Donation made to a charity or nonprofit organization |
Example of Deferred Charitable Gift Annuity Calculator
Consider an individual planning to donate $50,000 annually to a charitable organization, with an expected annual return of 5%, and the annuity payments beginning in 10 years. Using the formula:
P=(1+0.05)1050000
P ≈ 1.628950000 ≈ 30717.71
Therefore, to achieve a $50,000 annual annuity payment after 10 years, the individual would need to make an initial charitable contribution of approximately $30,717.71.
Most Common FAQs
A Deferred Charitable Gift Annuity is a planned gift arrangement where the donor contributes funds to a charity, with the charity agreeing to make annuity payments to the donor starting at a future date.
The present value is determine using the formula: P = A / (1+r)n , considering the future annuity payment, discount rate, and years until payments begin.
Yes, the calculator assists in planning charitable contributions by determining the initial donation amount needed to achieve desired future annuity payments, aiding in financial planning for philanthropic goals.