Sowing generously and reaping generously is one of those core principles that farmers and disciples live by. A farmer must sow generously in order to have the opportunity to reap a generous harvest. Likewise, a Christian must sow generously in order to abound in every good work and enlarge the harvest of righteousness. (2 Corinthians 9:6,10)
A charitable gift annuity (CGA) is a giving tool that allows you to sow and reap generously. The concept is relatively simple. You donate assets or cash now to charity; they pay you an income stream on that donation and the charity gets to keep the remainder of the gift after you die. The more you contribute, the greater your payout, and the greater the benefit to charity at your death. Sowing generously enlarges the harvest of your righteousness and funds good works!
A CGA is a tool that best fits retired folks who want to boost their income while securing a gift, or younger folks who are interested in deferring the income stream till a later date. Either way, it is a great way to leave a legacy gift to fuel ministry.
“A charitable gift annuity is one of the easiest ways a person can secure a charitable gift at death,” says Christine Wall, Planned Giving Advisor for MB Foundation in Fresno CA, “and the side benefit is the donor secures a reliable income stream based on the contribution!”
Another incentive is that the donor receives a higher income stream than is currently available from a bank certificate of deposit or a savings account.
What does the charity get out of the arrangement? An irrevocable cash gift sometime in the future. If, however, the money you donated runs out before you die, then the charity is still obligated to payout your income, using its own funds as necessary. So, it is important to have your CGA issued by a charity that is financially sound.
MB Foundation offers charitable gift annuities and currently manages 162 contracts worth $5.6 million. MB Foundation serves these annuitants by providing expert administration of the gift, a sound financial footing and acts as a conduit to facilitate the gift to one or more ministries of the donor’s choosing.
The benefits of a charitable gift annuity are many (security, increased income, tax deduction, etc.), but the true benefit is intangible: the opportunity to secure a gift to the ministries you love while you’re still alive.
Click here to figure out your own payout rate and tax benefits.
The process to establish a CGA with MB Foundation is simple and does not require legal counsel. Generally, the charitable gift annuity works best for donations in the $15,000 to $100,000 range. Larger donations might be better served through a charitable remainder trust which offers more flexibility and other benefits.
If a 77 year old donated $25,000 to MB Foundation via a CGA, the annuity or payout rate would be 6.2% paid quarterly, with an immediate charitable tax deduction of $10,745. The annual annuity amount would be $1,550, of which $1,285 is tax-free and $265 is ordinary income. Rates are established by the American Council of Gift Annuities and are based on life-expectancy. So, the older you are the higher rate you get!