Stelter’s Senior Gift Planning Consultant, Lynn Gaumer, J.D., is back to share an update on the new schedule of CGA rates.
The American Council on Gift Annuities rates committee has revealed a new schedule of suggested maximum two-life charitable gift annuity (CGA) rates for gifts established on or after July 1, 2020. The single-life rates were released last week. The new two-life rates are 0.3% to 0.5% lower than the current rates.
The table below shows selected current and new two-life CGA rates. A more complete listing of the current and new rates can be found here.
Gifts Made on or After July 1, 2020
Your Donors Will Benefit—If They Act by June 30
Under the current schedule, Tom and Mary, both 79, transfer $25,000 in exchange for a charitable gift annuity. They would receive annual payments of $1,400, a rate of 5.6%. After the new schedule is in place on July 1, their same gift will provide $1,300 in annual payments, reflecting a 5.2% rate.
Time Is Running Out
Given recent market fluctuations, new donors may be interested in receiving fixed income for life. With rates decreasing July 1, the time for them to establish a CGA is now.
You may wish to reach out to current annuitants and reassure them that they will continue to receive their payments regardless of economic conditions. You may also want to include a “soft ask” if they would like to establish another CGA before rates decrease.
The CARES Act, which became law in March, allows individuals to make a cash charitable contribution this year of up to 100% of their adjusted gross income (AGI), if they itemize their deductions. There still seems to be some uncertainty as to whether the new 100% AGI limitation applies to a cash gift to a qualified organization to fund a CGA. If you have donors who are interested in making a cash gift in exchange for a gift annuity, encourage them to work with their financial advisor to get a recommendation as to whether they can benefit under the new law.
Stelter Is Here to Help
We recommend you reach out now to your donors who may be interested in making a gift before July 1 to take advantage of the current rates. 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.