In Forbes Magazine’s upcoming 2012 Investment Guide, in their June 25, 2012 issue, you will find among various investment ideas an article on gift annuities!
Check it out:
While the experts in the field will certainly have pet peeves about parts of the article, it is very interesting and encouraging to see planned giving getting into a mainstream publication like this. And, treated as an investment, no less!
Here are my quick comments:
- Someone needs to tell the author not to make statements like: “Consider yourself a prime candidate for investing with your college if:…” It is a major “no no” in this business to refer to a gift annuity as an investment (however tempting it may be).
- I think the author mixed up gift annuities and charitable remainder trusts. He fixated on a 5% yield in the beginning of the article – but that rate is part of the example for the charitable remainder trust that he talks about before giving an example of a gift annuity (the title of the article is Does A Charitable Gift Annuity Make Tax Sense for You!).
- When he finally gets to the gift annuity example, he quotes a CGA payment rate of 6.2% for a 70 year old (offered by Harvard). Sounds great except that the standard ACGA rate currently for a 70 year old is 5.1%. A single donor won’t get 6.2% until age 77 for most charities issuing gift annuities today! It is very important for most charities issuing CGAs today to stick with the ACGA rates – this article may end up being a real problem if donors show up with it and wonder why they can’t get rates like this.