Gift Annuities - Caring for yourself or a loved one while caring for your community

Last week, I explained the basic concept of a charitable gift annuity and how both a charity and donor can benefit from this unique financial arrangement. To recap, a charitable gift annuity (CGA) is a contract between a donor and a 501c3 charitable organization. The donor contributes assets to the charity and in return receives payments, or an annuity, for life. The donor is the person who is contributing the assets to the charity; the annuitant is the person who actually receives payments from the charity.

CGA programs are regulated by the Florida Department of Insurance and rates are established by the American Council on Gift Annuities. Here is a typical example of why a CGA can be a good fit for a donor.

Phil Anthropy is a 79-year old retiree. He currently has $100,000 in CDs paying 3.5 percent. Phil has volunteered for many nonprofits throughout the years and he has a special concern for environmental issues. He intends to contribute a significant gift to the Southwest Florida Community Foundation in the future. However, he has some concerns about the downturn in the economy and how it will affect rates. He also worries that some of his fixed expenses are pinching his monthly income.

Phil meets with the foundation staff member and explains his concerns. The staff person notes that a charitable gift annuity might be a good fit. He can gift the $100,000 to the charity and receive annual payouts of $7,800 for the rest of his life.

Remember that the American Council on Gift Annuities determines the annual rate and that the rate is determined by the annuitant's age. For Phil, 79, the rate is 7.8 percent. If he chose to fund the annuity to be paid to his spouse or sibling, the annuity rate would be based on their age and not his. Visit www.acga-web.org for information on annuity rates.

Phil also contacts his accountant and professional advisor to review his decision. Some of the issues might include the type of asset donated and taxable versus nontaxable income.

Phil can also make another powerful decision that will ensure environmental issues continue to be addressed in Southwest Florida. When an annuitant dies, often the principle is used immediately by the charity to fulfill today's needs. However, Phil wants to leave a legacy for his family, particularly his ten grandchildren, some who live in Southwest Florida and others who visit from his home state of Ohio. He wants to ensure that environmental causes are supported in Southwest Florida for many years to come.

He has requested that at his passing, the gift be used to establish an endowed Field of Interest Fund at the foundation. When he dies, the foundation will use the principle to establish the Phil Anthropy Environmental Fund, which will be used by the Foundation to support agencies and needs that focus on all aspects of the environment: air and water quality, wildlife, habitat, conservation and preservation. Every year, the foundation will pay out a percentage of the fund through our grants and distribution process. The principle is retained for endowment. Any donor can make a contribution to this fund in the future, thereby increasing the amount of the fund and the positive impact on the environment.

If you have the desire to make a significant contribution to your favorite charity but may not have the resources to make this gift possible today, consider how a charitable gift annuity might be right for you or a loved one. Please contact your professional advisor or the Southwest Florida Community Foundation for more information.

The Southwest Florida Community Foundation has been supporting the communities of Lee, Charlotte, Collier, Glades and Hendry through endowed funds for more than 30 years. With assets of more than $57 million and 314 endowed funds, the community foundation has provided more than $30 million in grants and scholarships to the communities it serves.

For more information, please call 274-5900, or visit their web site at www. floridacommunity.com