Charitable Gift Annuity – A Win-Win for All

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In the world of non-profit fundraising, Charitable Gift Annuities fall into the scope of Planned Giving but are often regarded with skepticism because they require more in terms of education, planning, negotiation and counsel than most other gifts.

Yet Charitable Gift Annuities offer opportunities for discussion that yield benefits not only to the charity but also to the donor beyond a one-time tax deduction.

So what is a Charitable Gift Annuity?  Simply put, it is a donation to a charity that not only offers a tax deduction for the donor, but also creates an income stream which can in turn be assigned to any individual or entity designated by the donor.

4018A conversation about a Charitable Gift Annuity can occur from many angles but possibly the most attractive angle is when it can be coupled with a discussion regarding Roth IRA re-characterizing. What does a Roth IRA have to do with a Charitable Gift Annuity?

Quite simply it shows a donor how they can:

  • Give a significant donation to their favorite charity;
  • Get a tax deduction on that donation;
  • Use that deduction to create tax free income from a ROTH type of investment;
  • Leave heirs more of a legacy;

Here’s just one example of how John & Jane Doe used a Charitable Gift Annuity to benefit both their favorite charity and the re-characterization of their own assets:

Chart 2

These are the conversations that clients are interested in having. The charitable gift annuity is a clear and fairly simple concept and since the 2008-2009 meltdown, older clients in particular are looking for guarantees and solutions that take their retirement income out of harm’s way and offer more risk averse options. This gift annuity strategy is suitable for those who have charitable intentions and who want to create income from the gift while still alive. This is clearly the kind of solution planning donors will appreciate hearing about because it expands a charity’s ability to offer concierge type services to their donors and trustees.


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