Create Some Income With Charitable Gift AnnuitiesIf you wish to make a gift to your favorite charity, and at the same time assure an income for yourself and others, Charitable Gift Annuities is your answer. In this case, a contract is signed between the charity and another party, where the charity agrees to pay a fixed sum of money for a specific period in return for a cash or property donation. The person who donates the asset or cash is called the 'donor', whereas the person or organisation who receives the charitable payments is called the 'annuitant' or 'beneficiary'. Most of the 'donors' are also the annuitants or beneficiaries. However, in some cases they are different, and the maximum number of annuitants can be two. In such cases the payments are made to them either jointly or one after another. One basic feature of charitable gift annuities is that, the amount to be paid is fixed from the outset. They do not fluctuate either way in later stages. The existing market rates, interest rates, or stock market positions have no bearing on the payments to be made in case of charitable gift annuities. At times this hits the charitable gift annuities quite hard and eats up a portion of their general funds. There are several other factors that can affect the size of the payments in such trusts. One is the gift annuity rate that is offered by the charity. For example, the charitable gift annuities in the United States are mostly based on the recommendations of the American Council on Gift Annuities. Another factor that affects the size of payments is the value of the contribution made by the donor. The third is the number of annuitants. If there is a sole beneficiary, the size would be different when there are two. The last but not least important factor is the age of the annuity or annuities as the case may be. In the United States, the American Council on Gift Annuities has been publishing periodically a schedule of charitable gift annuity rates since 1927, and most charitable gift annuities are based on these recommendations. However, a charity is at liberty to offer other rates beyond the limit fixed by the recommendation of the American Council, but in no case the rate can be more than the limit fixed under Federal Laws. Since there is a healthy competition among different charities to attract donors, people find the rates to be mostly identical. But, experience has also revealed that, the donors are more concerned with the philanthropic decisions and ethical values of the ideologies, rather than the rates while making gifts. Thus the bearing of rates of the charitable gift annuity is not marked on the behaviour of the donors. The rates offered by the charitable gift annuities are also lower than those offered by insurance companies. As a result, a good deal of the funds made available, can be used for charitable purposes. But the rates are quite attractive even for those who desire to have the twin benefits of supporting a charity as well as create some income for their own, while donating for the charitable gift annuities. Best beneficiaries of charitable gift annuities are persons who have retired, those who want to increase their cash flow, those who desire to have benefits of guaranteed payments, and those who desire to save taxes. |