A Gift for Uncertain Times

Charitable giving survives economic downdrafts. That’s because people continue to care about the causes they have long supported and donate generously even when they have less to give. They also tend to be more astute in their charitable contributions.

For example, one of the more popular forms of giving these days is a device known as the charitable gift annuity. These are particularly well-liked because they provide such a high degree of stability.

The words “charitable gift” suggest that this giving tool is recognized by the IRS as an acceptable way to make a tax-deductible contribution. Because such gifts are irrevocable, they entail several attractive benefits.

The term “annuity” means that the donor (or someone designated by the donor) will receive annual fixed payments for life. This amount is established at the outset and will remain stable no matter what happens to the economy.

The charitable gift annuity is a combination gift: part donation and part annuity. A portion of what you give eventually goes to the charity, and the other portion is returned to you in the form of regular, dependable annuity payments.

The amount a gift annuity produces over one’s lifespan, as well as the charitable gift amount, is determined when the CGA is established. It depends on several factors, including the age of the person(s) receiving the payments and the amount of the donation.

Consider this example: Mr. and Mrs. Cohen are both 70 years of age. They wrote a check to their favorite charity for $25,000 to obtain a charitable gift annuity. Because of their life expectancies, the current rates provided by the charity, and a calculation factor provided by the government, they signed a contract with the charity to receive $1,250 every year for the rest of their lives, of which $948 would be tax-free. They are also able to claim a $9,500 charitable income tax deduction.

Charitable gift annuities make sense in these uncertain times because they provide regular, fixed, and partially tax-free payments. They also provide needed financial resources for worthy charitable organizations.

Would you like to learn more about charitable gift annuities? I would be happy to provide an illustration, at no cost or obligation. Feel free to call at 614-338-2365 or email me at jjacobs@tcjf.org.

Article appears as originally published in the Ohio Jewish Chronicle, Thursday February 4, 2016.

Jackie Jacobs is the Chief Executive Officer of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.

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