Seven Benefits of a Gift Annuity
By Jackie Jacobs
There’s rarely been a better time to obtain a charitable gift annuity. Low interest rates and roller-coaster markets are causing people to think twice about their financial decisions, and to consider the benefits of a charitable gift annuity.
When you compare standard charitable gift annuity rates (as recommended by the American Council on Gift Annuities) with what you might receive from a savings account or a certificate of deposit, you will likely be pleasantly surprised. For example, the payment rate for a 70-year old senior is 5.1%. At age 80, the rate is 6.8%, and if you are 90 or older, you would receive 9%. In other words, a $100,000 gift annuity would provide an 80-year-old $680 every year. (Note: Rates are slightly lower when the annuity is for two persons. Like most charities the Columbus Jewish Foundation uses the rates recommended by the American Council on Gift Annuities.)
When you establish a charitable gift annuity, you decide how often you want to receive your payments. Most annuitants receive their checks or direct deposits quarterly or semi-annually. Some choose annual payments. Whatever you choose, receiving regular payments on a specific, predetermined date is comforting and also helpful for planning purposes.
Your payment rate will be locked in at the time you obtain your gift annuity. It will not rise or fall with the economy. Instead, it will be the same amount every year – and that can mean a lot in uncertain times.
Gift annuities are for life. No matter what your age now or how long you live, your payments will continue right to the very end. And if you have a two-life gift annuity, when on person dies the other can continue to receive the same amount for the rest of his or her life. This benefit of ongoing payments can provide security for each spouse as they enter their older years.
Charities that offer charitable gift annuities must stand behind them. Most states require that they have a reserve fund set aside to meet their obligations. The Columbus Jewish Foundation backs up its annuity obligations with the full unrestricted assets of the Foundation. Annuitants feel safe and secure, confident that their payments will continue without fail.
Relief from Taxes
Since part of your contribution for a charitable gift annuity is considered a charitable gift by the IRS, you will receive an income tax charitable deduction to apply on an itemized return. Also, during your life expectancy, you will be able to claim part of the annuity payment as tax-free income.
Obtaining a charitable gift annuity is much easier than most people think. When you do so, you should be provided with a tailor-made illustration, with your age and contribution amount included, so you can see how it all works. You should share these materials with your family and advisor(s).
Another benefit is the enormous satisfaction you will receive for making a charitable gift in this manner. Every time you receive a payment, you will be reminded that your charitable gift annuity will eventually be used for charitable purposes.
Feel free to call me with your questions or for a no-obligation illustration. I can be reached at 614-338-2365 or firstname.lastname@example.org.
Article appears as originally published in The Ohio Jewish Chronicle, Thursday August 25, 2016.
Jackie Jacobs is the Chief Executive Officer of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.