Rates of Charitable Gift Annuities Lowered on July 1
Set up a CGA now with the Jewish Community Foundation before the payout goes down.   

Donors establishing a charitable gift annuity (CGA) prior to July 1, 2008, will receive a higher payout than those established on or after July 1. A new lower schedule of CGA payout rates has been announced by The American Council on Gift Annuities that goes into effect on July 1.

 “Those who have already set up a CGA need not worry. The rate that was in effect when you funded your gift annuity will remain fixed for the remainder of your life,” said Wendy Rosenblum, Jewish Federation assistant director of development who manages the operations of the Jewish Community Foundation (JCF).

The rates are changing because the gift annuity rates charities pay to donors depend in part on economic conditions, expected investment rates of return and how long people of all ages are expected to live.

To establish a CGA through the JCF, a donor gives cash or other assets in exchange for the JCF’s promise to pay an annuity payment for the life or lives of one or two individuals.  Assets might include surplus cash in a checking account or money market fund, a maturing bond, stock or other property.  The donor can choose to have the annuity paid to individuals other than the donor.  The donor receives a charitable income tax deduction in the year the CGA is established for the value of the property given to the JCF less the value of the stream of annuity payments payable by the JCF.

“This is a wonderful way to make a substantial gift to a charity of your choice, get current tax benefits and receive ongoing income (an annuity) from your assets. Upon your death or that of the individual or individuals you choose to receive the annuity payments, the remainder of the original gift becomes your charitable gift to the charity for its use,” said Rosenblum.

To establish a gift annuity, the donor makes a gift to charity and the charity signs an agreement for the payment of the annuity which specifies the individual or individuals who are to receive the annuity payments, the annual annuity payment amount, the starting date and the frequency of payments.  The amount of each annual annuity payment is based on the amount of assets transferred to the JCF, the age(s) of the recipient or recipients of the annuity payments, and the rate schedule of the American Council on Gift Annuities in effect at the time of the gift. “The older the donor, the higher the payout rates because the payments will probably be made over a shorter time span,” said Rosenblum.

Marylou Ruhe, in her mid-80s, set up a CGA with the JCF, naming the St. Louis Holocaust Museum and Learning Center (HMLC) as beneficiary. The Holocaust Survivor from Poland was one of the Museum’s first docents when it opened 13 years ago. “Through the course of my volunteering there, I have told the truth about the horrors to civic groups and middle, high school and college students hoping they will see to it that nothing like the Holocaust happens again. That’s why the Museum is such an important community resource and I feel strongly about supporting it now and after my lifetime. So I contacted the JCF, wrote a check and in return I receive quarterly annuity payments. When I pass away, the remainder of my original gift will go the Museum.”

Another type of Life Income Gift is a Charitable Remainder Unitrust (CRUT), set up by Michael and Leslie Litwack through the JCF. This trust is funded with their assets and, in turn, pays an annuity for life. The Litwacks used a portion of the annuity to purchase life insurance, naming their sons as beneficiaries. Said Michael Litwack: “This gift allows us to support causes we care about while maintaining our financial security. We received an immediate income tax charitable deduction equal to the present value of the future gift to the JCF, and the full value of the gift has been removed from our estate. Most important, we are contributing to the Jewish community and this perpetuates our Jewish values and our Jewish name -- a wonderful legacy to leave to our community.”

For information or to set up a CGA or other life income gift, contact Wendy Rosenblum at 314-442-3740.

The Jewish Community Foundation of St. Louis is a Jewish Federation service created to serve as a central place for long-term planned giving, attract more endowments and build permanent community resources within one endowment structure. It is backed by 100+ years of Federation's service as a trustee of the St. Louis Jewish community's funds, which currently has more than $100 million in endowment assets and one of the largest unrestricted endowments of any North American Jewish Federation.