Stelter’s Senior Gift Planning Consultant, Lynn M. Gaumer, J.D., is here with an update on ACGA rates.
Exciting news today from the American Council on Gift Annuities: Charitable gift annuity rates will increase, on average, by approximately 0.6% depending on the age of the annuitant. The new suggested maximum rates will go into effect Jan. 1, 2023. The ACGA expects to release new rate charts to members on Dec. 5 and non-members on Dec. 19.
Now Is the Time—A Look at Demographics
Over 25% of the population is old enough to create a gift annuity. According to Statista, the silent and mature generations (born 1928-1945) made up nearly 6% of the population in 2021. Baby boomers (born 1946-1964) made up just over 21% of the population. Late boomers (born 1954-1964) are currently in their prime earning years but many are starting to think about retirement. By 2030, all baby boomers will be 65 years or older (about 61 million people)—the perfect age to create a charitable gift annuity.
These generations may have concerns about secure, fixed income during their retirement years. 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 or volatile securities to fund a charitable gift annuity and increase their income while minimizing capital gains taxes.
The Year of the CGA?
With not one but two increases in ACGA rates in the last 6 months, 2023 may be the year of the CGA. And we may have another gift just in time for the holiday season—the potential passage of retirement plan legislation. The current text adds a provision for IRA owners to make a one-time qualified charitable distribution (QCD) gift to fund a gift annuity up to $50,000.
As chair of the National Association of Charitable Gift Planners Leadership Institute, I recently posed the following question to members: “How many more CGAs do you think you will create if the retirement legislation is signed into law?” The answer was nearly unanimous: “A lot more.”
If your organization does not offer CGAs, now is the time to look into either creating a CGA program or working with a third party to offer them. See my blog “Minimize Risk to Your Organization” for more information on how your organization can minimize risk and easily offer CGAs by working with a third party.
Stay tuned for more information on this exciting legislation if it makes its way through Congress.
Next Steps
Donors will want to know the exact payments they can expect. When the rates are released, we recommend you communicate how they can take advantage of the rate increase when they make a gift on or after Jan. 1, 2023.