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Eight Great Reasons to Like Charitable Gift Annuities

If you struggle to understand today’s volatile investment markets or are frustrated by low-to-near-zero interest rates, you might also be second-guessing a host of other financial matters. For charitably- minded individuals who depend on fixed income, charitable gift annuities are an idea that many are taking to heart.  There are eight great reasons why people love them.

Fixed payments:  From the moment you create a charitable gift annuity, future payments are made quarterly, semi-annually, or annually and the amount will never change.  Payments are usually made by check, but many charities are also able to arrange for direct deposit to your bank or credit union if you like. 

Lifetime payments:  The payments continue for as long as you live.  If you want a two-life charitable gift annuity, as most couples do, payments continue throughout the life of the survivor.

Solid Rates:  You may be surprised at the rates that are available.  For example, someone age 75 qualifies for 5.8%, and at age 80, the rate is 6.8% percent.  Put another way, for a $100,000 charitable gift annuity, an 80-year old can receive $6,800 each year.  Rates are slightly lower when the annuity is paid to two persons.  Most charities follow the rates recommended by the American Council on Gift Annuities. 

Dependable payments: Charitable gift annuities are backed by the charity’s assets, so you feel assured that your payments will always be there.  Most charities have a charitable gift annuity reserve fund for these obligations as an extra measure of safety. 

Uncomplicated: Creating a charitable gift annuity is simple and easier than most people think.  The charity should provide you with information to review with your advisors and family before  making a decision so you will know exactly how it works.  The one or two page agreement is straightforward. 

Tax-advantaged: An important part of your payments during your life expectancy (often half) will not be subject to state of federal income tax. Further, if you itemize deductions, your gift qualifies for a charitable deduction that typically today is 25% or more of the amount given.  Also, the amount given is removed from your estate so it will not be subject to tax later on. 

Confidential illustration: A personalized and free illustration should be available from the charity.  It should be available at no cost, you should feel no pressure, and you never should feel any obligation. 

A charitable gift annuity is a simple mechanism that can increase your income, offer both current and future tax savings, and can minimize your capital gains exposure.  The annuity is the oldest life-income-producing gift known in the United States, dating back to 1843, when what is believed to have been the first charitable gift annuity was issued by the American Bible Society.  Charitable Gift Annuities have been around a long time, and there are many reasons to like them.  Feel free to call me if you have questions about charitable gift annuities.  I can be reached at 614-338-2365 or jjacobs@tcjf.org.

 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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