Rising interest rates and charitable gift annuities–a winning combination?

Clearly, your donors’ charitable giving priorities are impacted by interest rates. Charitable components of your donors’ estate and financial plans are no exception. For example, charitable gift annuities are becoming more attractive to donors. Thanks to the recent increase in rate of return assumptions for charitable gift annuities, this planned giving vehicle is now more attractive to people who like the idea of a higher payout rate for their lifetime annuity.

Charitable remainder annuity trusts–also a perk with rising rates?

A charitable remainder annuity trust can be an effective alternative to a charitable gift annuity for certain donors. Indeed, creating a charitable remainder annuity trust in a high interest rate environment, versus a low interest rate environment, drives down the present value of the donor’s income stream, which means that the value of the remainder passing to your organization’s endowment fund at the community foundation is relatively high and therefore so is the donor’s up front tax deduction for the charitable portion of the gift.

More reasons to love the QCD

Qualified Charitable Distributions are already an amazing planning tool for your donors who are over the age of 70 ½. As you no doubt know, the $100,000 QCD allowance from a donor’s IRA counts toward satisfying the donor’s Required Minimum Distribution and avoids the income tax on those funds. Plus, those assets are no longer part of the donor’s estate at death, which avoids estate taxes, too. What’s more, the QCD may get a boost if the EARN Act becomes law; proposed bipartisan legislation would expand the QCD rules to allow a one-time, $50,000 QCD to a split-interest gift such as a charitable remainder trust or a charitable gift annuity.

Please reach out us for help with these and other planned giving transactions. In many cases, incorporating a fund at the community foundation–whether your organization’s endowment fund or the donor’s own fund–into the strategy creates benefits across the board. You’ll also benefit from our team’s behind-the-scenes assistance to help you communicate, structure, and secure the planned gift.