Charitable gift annuities

By Ellen Weiss, Executive Director, TOP Jewish Foundation, a department of Jewish Federation of Greater Naples

TOP Jewish Foundation (“TOP”) proudly administers a charitable gift annuity (CGA) program for the benefit of Jewish Federation of Greater Naples.

For many years, charitable gift annuities have been a popular charitable giving option. The popularity is mostly due to the fact that the gift generates a fixed stream of income for the donor (“annuitant/s”) for the remainder of their life/lives and the gift is partially tax-deductible.

Falling into a giving category called “life income gifts,” CGAs are the most popular gift in the category. In terms of the number of existing life income gift agreements or contracts, there are far more CGAs than charitable remainder trusts or pooled income fund participants. The American Council on Gift Annuities (ACGA), the body that regulates CGAs, conducts a regular survey of gift annuity programs and have noted that there are more than 100,000 gift annuity contracts in place as of this writing.

How do CGAs work?

• A donor decides to donate a charitable gift of a minimum of $10,000 to benefit JFGN. The gift is typically cash but can also be another appreciated asset such as securities or real estate.

• There is an immediate – partial – tax deduction based on the life expectancy of the annuitant/s and the anticipated income stream.

• Reduced or eliminated capital gains tax liability for gifts of appreciated assets

• The donor works with TOP, who administers the CGA for the benefit of JFGN.

• TOP creates a simple and easy to understand agreement with the donor.

• The CGA will make payments to one or two donors (“annuitants”) for life according to the American Council on Gift Annuities rate schedule based on age and the number of annuitants.

• CGA assets are pooled together at TOP and invested according to state regulations with TOP’s investment advisor, Goldman Sachs, with low investment and administration fees.

• CGA payments are guaranteed for life regardless of investment performance.

• Note that donors may establish multiple annuities over time.

• Taxation of all annuity payments is established at the time of the gift.

Why are gift annuities so popular?

For donors, gift annuities are easy to understand, easy to establish, the minimum gift amounts are low, and the payments are guaranteed for the life of the annuitant/s. Also, gift annuity payment rates, which are based on the ages and number of annuitants, are increasingly attractive for annuitants, as interest rates have increased.

Interestingly, despite the low gift minimums, gift annuities can be appropriate for donors making six- and even seven-figure gifts. All gifts will be subject to the gift acceptance policies of JFGN’s foundation department, TOP Jewish Foundation.

Most importantly, donors can enjoy all the financial and tax benefits of a CGA while supporting the critically important work of Jewish Federation of Greater Naples.

For more information on CGAs or TOP Jewish Foundation, please contact Ellen Weiss, executive director, at ellen@topjewishfoundation.org or 813-769-4785.