Another technique that may be used to make a commemorative gift is the “life income gift,” which provides lifetime payments to the donor as well as a gift to the Foundation. Examples are the charitable gift annuity and the charitable remainder trust.
Bill W., a retired soldier 74 years of age, wants very much to endow an annual grant for a student bursary in honour of a fellow soldier, a long-time mentor and friend, who died while serving in the former Yugoslavia. Because he depends on the income from his assets, Bill contributes $75,000 for a charitable gift annuity. For the rest of his life, he will receive payments of $5,916 per year and 84% of this amount will be received tax-free. Bill is also entitled to a donation receipt of $18,750, reflecting the gift portion of his contribution that will be used to establish the named friend Memorial Fund within the For the Soldier Legacy Fund.