Stelter’s Senior Gift Planning Consultant, Lynn M. Gaumer, J.D.,CAP®, is in to give you an update on charitable gift annuity rates.
The American Council on Gift Annuities Board of Directors has announced that suggested maximum charitable gift annuity (CGA) rates will remain unchanged for the time being.
The ACGA concluded that while interest rates and the 10-Year Treasury Rate continue to fluctuate this year, they have not moved enough to warrant a revision to the ACGA’s return assumption. (The ACGA’s rates are designed to produce a charitable gift at the conclusion of the contract equal to half of the funds a donor contributed for the annuity.)
Therefore, the board decided to keep its suggested CGA rates the same for now. The board will continue to monitor market and economic conditions and could make changes later in the year if conditions warrant.
With Rates Remaining High Into Next Year, It’s Time to…
Reconnect With Current Gift Annuity Donors
According to the ACGA 2021 Survey on Gift Annuities, about half of new gift annuities are from previous gift annuity donors. So take time to reconnect with them. Many of the current rates are higher than they have been in 17 years, but they may not last into next year. This may lead to conversations about funding an additional gift annuity with traditional assets such as cash or appreciated stock or using IRA assets to make a one-time election of up to $54,000 (a number that will be adjusted for inflation next year) to fund a gift annuity.
Reach Out to Retirees
Over 4 million boomers retired in 2024. A study from Fidelity Charitable (pdf) highlights some important insights on retirees:
- Charitable Intentions: A significant 78% of pre-retirees and retirees express a desire to give to charity. However, many are not aware of the tax-efficient strategies available to enhance their contributions.
- Tip: Reach out to your supporters to inform them about the attractive rates offered by CGAs.
- Awareness of Tax-Efficient Strategies: Only 32% of pre-retirees and retirees know about options like donating appreciated assets, and 21% are unfamiliar with any giving methods beyond cash donations.
- Tip: This data suggests a great opportunity to educate your supporters on various gift strategies, including CGAs.
- Engagement with Advisors: While 65% of retirees collaborate with financial advisors, only 51% have discussed charitable giving with them.
- Tip: This is where your organization plays a crucial role; supporters often look to nonprofits for guidance on philanthropic matters.
- Volunteer Engagement: A remarkable 71% of pre-retirees and 55% of retirees volunteer regularly, with many dedicating over 13 hours each month to causes they care about.
- Tip: According to Dr. Russell James J.D., Ph.D., CFP®, volunteers are excellent planned giving prospects.
If your organization offers gift annuities, now is the time to discuss their many benefits. If it doesn’t, now’s the perfect time to either create a CGA program or work with a third party such as the National Gift Annuity Foundation to offer them. You can learn more about this organization in my most recent webinar, Say Yes to the Gift.
Next Steps
We recommend you continue to communicate with donors who may be interested in making a gift yet this year to take advantage of these rates.