By Jackie Jacobs
A charitable gift annuity is like a fruit tree in at least five respects.
First, a tree keeps yielding fruit while remaining the same tree year after year. When you obtain a gift annuity, the gift tree stays planted in the charity’s orchard. Each year it provides fruit in the form of payments to the annuitant(s). Thus, a gift annuity is both tree and fruit. You give the tree to charity, and the charity gives you the fruit from the tree for the rest of your life.
Second, a healthy tree requires care. The charity that offers the annuity must maintain a reserve fund and manage and cultivate each gift annuity tree with TLC. Payments (pickings) occur on time, and each piece of fruit is delivered to the annuitant as previously scheduled.
Third, gift annuity trees can produce a crop several times during the year, depending on the donor’s wishes at the time of planting. Depending on the sponsor, payments can be paid out quarterly, semi-annually, or annually.
Fourth, gift annuity trees are especially resistant to disease and poor weather conditions. They are sturdy because they are planted in the good soil of the charity’s overall financial assets. Economic storms may come and go, but the health and strength of charitable gift annuities remain a dependable source of fruit.
Fifth, just as a juicy apple or peach is refreshing to the taste, gift annuities provide enjoyment as a source of dependable payments to the annuitant … and also as a source of future financial help to the charity that retains the gift assets for use in future years. Gift annuities provide philanthropic satisfaction both for the donor and the charity.
Likening gift annuities to fruit trees helps us appreciate their special features. But there is much more that can’t be adequately conveyed in such a comparison. Here is the fuller picture:
A gift annuity is an irrevocable gift to a charity.
A gift annuity is a simple contract between you and the charity.
Under this contract, you contribute assets to the charity, which in turn provides a guaranteed fixed income for life for one or two beneficiaries.
The amount of the annuity payment depends upon the age of the individual receiving the income (or the combined age of two beneficiaries).
Depending on the sponsoring charity, a gift annuity may be established with as little as $5,000 or $10,000.
Charitable gift annuities can be funded with cash or appreciated securities.
The minimum age to fund an immediate gift annuity generally is 55 years of age, although most charities prefer donors who are at least in their sixties.
A charitable income tax deduction for a portion of the gift annuity’s value can be claimed in the year that the gift annuity was established.
If funded with appreciated assets, a portion of the capital gains tax will be avoided, and the remainder will be paid over time.
Call me to learn more and for a personal illustration at 614-338-2365 or email at <a href=”mailto:firstname.lastname@example.org”>email@example.com</a>
<strong>Article appears as originally published in the <em>Ohio Jewish Chronicle</em>, Thursday May 5, 2016.</strong>
<i>Jackie Jacobs is the Chief Executive Officer of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.</i>