Planned Giving: A Better ROI than a Bank CD

Have you looked at the rates of return that banks pay on certificates of deposit lately?  As we age, we are often advised to keep a significant portion of our investments, “short and liquid.”   Well, a one year certificate of deposit today—even at Jerry Stiller’s Capital One Bank—is only going to pay 3/10 of 1%.  But a charitable gift annuity created by a 72 year-old will return 8%.  Moreover, 75% of the funds returned will be tax-free.  What is more, they are guaranteed for life.  An older person can obtain an even higher rate of interest with a larger portion returned tax-free.

Just think of the favor you will do for your members and donors by providing them with this “investment” opportunity that gives them an increase in income a reduction in current income tax and a sure knowledge that they will have provided a long-term benefit to your organization which means so much to them.

The charitable gift annuity is a simple contract between the donor and your agency. It gives a donor the opportunity to make a charitable gift and secure a stream of income for life. Under this arrangement, donors transfer assets (usually cash or securities) to the charity in exchange for a commitment by the charity to pay them (and a second annuitant, if the donor so chooses) a fixed and guaranteed payment for the remainder of their lifetime(s). The total annual payment does not change. On the death of the annuitant(s), the remaining principal is payable to the charity. Annuities can be immediate, and begin payments in the quarter following the gift, or deferred until an age at which the annuitants begin receiving payments, usually at a rate even higher than the immediate annuity rate.

Some organizations may not have the capacity to manage even a charitable gift annuity program.  That is no longer a problem.  Connect with the United Way or Jewish Federation in your community and they will help you arrange a program under their umbrella.  Or, contact me by clicking here and we can help you understand the ins and outs of planned giving.  Then, everyone will have protection for the proverbial rainy day.