Stelter’s Senior Gift Planning Consultant, Lynn M. Gaumer, J.D., is here to give you an update on the new schedule of CGA rates.
This blog might look this familiar, because it is—just six months ago, gift annuity rates increased. And now, here we are again!
The American Council on Gift Annuities has released a new schedule of suggested maximum gift annuity rates for gifts established on or after January 1, 2023. On average, rates will increase approximately 0.6% depending on the age of the annuitant.
These new rates will mark the highest they’ve been in more than a decade.
The table below shows selected current and new comparative rates. A more complete listing can be found here.
Your Donors Will Benefit: An Illustration
Under the current rate schedule, Barbara, 75, transfers $25,000 in exchange for a charitable gift annuity. She will receive annual payments of $1,500, a rate of 6.0%. Instead, if Barbara waits to make her gift on or after the new rate schedule is in place on Jan. 1, the same gift amount will provide $1,650 in annual payments, reflecting a 6.6% rate.
2023 Is the Year of the CGA
With not one but two increases in ACGA rates in the last 6 months, making rates the highest they have been in over a decade, 2023 will 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 gift to fund a gift annuity up to $50,000.
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 say “yes” to gifts like CGAs.
Stay tuned for more information on this exciting legislation if it makes its way through Congress.
Stelter Is Here to Help You Prepare
It’s important to be thoughtful about how to convey this exciting news to your donors. Don’t rush to promote CGAs without a plan. We recommend you begin creating a strategic marketing plan for 2023 that highlights the many benefits of charitable gift annuities. To assist you with this, we are providing a letter that you can customize and use for your donor communications.