Investing with Faith / Jim Maslar

Charitable gift annuity enables philanthropic goals, provides income

Catholics are generous by nature and are often very humble in their giving. That is what I have found during the last two years working in the archdiocesan Office of Stewardship and Development.

Most of us, I’ve surmised, would love to be able to give a major gift to our favorite Catholic parish, school or agency. Many of us do not, however, have that capacity at any one point in our lives. Family financial responsibilities, coupled with retirement expenses, can limit the feasibility of contributing a larger gift.

One of the best parts of my job is to share creative giving options with folks from any and all economic backgrounds that may prove empowering to them.

Everyone’s circumstances are unique and allow for meaningful giving avenues that are known to them and God alone (and perhaps their financial or tax advisor!)

There is one particular gift option I’d like to share with you that works in that “middle ground” between charitable giving and financial limitations—charitable gift annuities or CGAs. Many of our donors have found that CGAs offer a unique “win-win-win” opportunity for them, especially those nearing or in retirement.

A CGA is simply a contract made between a donor and a charity in which the charity provides the donor (and/or a loved one) with a fixed-income stream for life in exchange for a sizable donation of cash or assets.

Whatever value remains in the CGA when you pass into your eternal reward is then transferred to the charitable beneficiary you had designated—like your favorite Catholic parish, school or agency. In the meantime, the lump sum is invested and grown, maximizing the eventual gift and ensuring your lifetime of supplemental retirement income. (This is the first win.)

A CGA gift can also provide several personal tax benefits. A partial tax deduction of the lump sum is available in the year of the gift, and capital gains taxes are partially avoided if appreciated assets (like stocks or mutual funds) are used to fund the CGA. The first few years of payouts also provide partial tax-free income. (This is the second win.)

Some donors find that using lower performing assets, like a CD or money market fund, to fund a CGA can provide a better rate of return for them (especially in today’s interest environment). Your fixed annual payment is calculated at the time of the gift using a percentage based on your age.

For example, where a $10,000 CD with your bank might provide a 1% (or less) return through a set number of years, a 75-year-old donor starting a $10,000 CGA today would receive a 5.4% interest payment each and every year (or $540) for the rest of his/her life. (This is the third win.)

Our archdiocese’s Catholic Community Foundation administers CGAs that benefit our parishes, schools and agencies, as well as the local Catholic community. In fact, we exist to serve them and you exclusively.

We utilize the American Council on Gift Annuities’ suggested percentages for determining our CGA rates and invest our funds in a socially responsible manner in accord with Catholic teaching and the U.S. Catholic bishops’ investment guidelines.

We currently have 68 open CGAs at the Catholic Community Foundation (with starting gifts ranging from $10,000 to more than $100,000) that will benefit everything from parish endowments to needs-based scholarships at our schools to our archdiocesan Bishop Simon Bruté College Seminary in Indianapolis—and everything in between.

If a Catholic CGA is of interest to you or a loved one, it would be our privilege to help you explore that possibility. For more information, please contact the Catholic Community Foundation at ccf@archindy.org.
 

(Jim Maslar is a Catholic philanthropic advisor for the archdiocese. Tax information or legal information provided herein is not intended as tax or legal advice and cannot be relied on to avoid statutory penalties. Always check with your legal, tax and financial advisors before implementing any gift plan.) †