Rates drop for charitable gift annuities.

The Board of the American Council on Gift Annuities has voted to reduce the recommended charitable gift annuity rates, effective July 1, according to Brethren Benefit Trust (BBT). Lowering the rates for deferred charitable gift annuities, effective July 1, also was recommended by ACGA at its annual review.

These rates are linked to the ages of annuitants and are expressed in percentages of the original gift amount, and they define the amount paid to the annuitants each year. BBT is advising those planning to make charitable gift annuities to act before the rate change goes into effect on July 1.

"The annuity rate of a charitable gift annuity is determined at the time it is issued, and that rate cannot be changed once it is established," said Steve Mason, director of the Brethren Foundation. "Because the payout may extend over many years, the benefit from acting before the rate change should be considered."

BBT offered a comparison of current rates to the new recommended rates, to illustrate how the change may affect annuitants. At the current rate, an annuitant of a "One-Life Charitable Gift Annuity" at age 60 receives 5.7 percent, but for annuities issued after the rate change the person would receive only 5.5 percent. At age 75, under current rates, the annuitant receives 7.1 percent, but for annuities issued after July 1 the new rate would be 6.7 percent. Annuitants of a "Two-Life Charitable Gift Annuity" at age 60 at the current rate receive 5.4 percent, but for an annuity issued at the new rate they would receive only 5.2 percent.

"To put this into perspective, a $10,000 charitable gift annuity issued before July 1 for a 60-year-old would generate an annual annuity payment of $570. But, if the very same charitable gift annuity had been issued after June 30, the payment would be only $550," Mason said.

Those considering a charitable gift annuity should consult with the charitable organization where the annuity would be issued. For more information contact Steve Mason, Director of the Brethren Foundation, at smason_bbt@brethren.org or 888-311-6530.

Source: 6/4/2008 Newsline