A second variation of the charitable gift annuity, similar to the retirement annuity, can be used to fund a child's or grandchild's college education and make a gift to OSU after the end of the specified period.

As with the retirement annuity, the donor makes a gift today and the income payout is deferred to a later date - when the beneficiary reaches college age. Rather than providing income for life, in this situation, the annuity payments are condensed into a four or five year time period. At the end of that time, the income stops and the gift is available to OSU to be used as the donor has designated.

The donor receives an immediate charitable income tax deduction in the year of the gift.

EXAMPLE: Grandmother purchases a deferred gift annuity for her granddaughter, age 3, with $75,000 cash. OSU promises to pay a deferred charitable gift annuity to the child starting at age 18. This annuity would normally provide $7,320 annual income for her lifetime. However, when the granddaughter reaches age 18, she elects to receive a lump sum distribution in annual payments of $25,020 over four years to help pay for college.

Grandmother receives an immediate charitable income tax deduction of $49,272, resulting in an income tax savings of $15,274 (31% marginal bracket).

Upon granddaughter's graduation at the end of four years, the annuity funds pass to OSU to establish an endowed professorship in Grandmother's name. Grandmother has been able to provide over $100,000 for her granddaughter's college education, has received a nice income tax deduction, and has made a substantial gift to OSU that will go into effect during her lifetime.

Note: Possible gift tax and generation skipping tax implications of this strategy should be reviewed with the donor's tax advisor.