Charitable Gift Annuity Rates on the Rise

Today we welcome a special guest on the blog: Stelter’s Senior Technical Consultant, Lynn Gaumer, J.D. In her role, Lynn keeps a close watch over tax legislation, research and trends that could affect your planned giving program.

I would like to share some exciting news that was announced earlier today at the American Council on Gift Annuities conference in Seattle, Washington. A member of the ACGA’s Board of Directors revealed a new schedule of suggested maximum gift annuity rates for gifts established on or after July 1, 2018.  A complete rate schedule will be available on May 15. On average, rates will increase from 30 to 50 basis points. The top rate will be 9.5 percent for donors who are 90 and older.

Your Donors Will Benefit: An Illustration

Under the current rate schedule, Mary, 79, transfers $25,000 in exchange for a charitable gift annuity. She will receive annual payments of $1,650, a rate of 6.6 percent. Instead, if Mary waits to make her gift on or after the new rate schedule is in place on July 1, the same gift amount will provide $1,775 in annual payments, reflecting a 7.1 percent rate. That’s a payout rate increase of approximately 7.5 percent.

Now Is the Time

Not only have the gift annuity rates increased but Stelter research* shows that individuals in the mature and boomer generations are concerned about having enough income to retire. A charitable gift annuity is a great way to receive income and make a gift to a nonprofit organization. As an added benefit, your donors may be able to transfer low-yield securities to fund a charitable gift annuity and increase their income while minimizing capital gains taxes.

Stelter Is Here to Help You Prepare

We recommend you begin communicating now with your donors who may be interested in making a gift on or after July 1 to take advantage of the recent rate increase. To assist you with this, we are providing a letter that you can customize and use for your donor communications.

Access our sample copy by clicking on the link below.

*2017 NMI Healthy Aging Database^® study sponsored in part by The Stelter Company

California residents: Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. Oklahoma residents: A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. South Dakota residents: Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.