Gifts that Give Back
Re-Introducing Charitable Gift Annuities for Seniors

Mark S. Roberti
Director of Stewardship & Development, Heartland Parishes of Ellis County

In my stewardship articles over the course of the last year, I have done my best to make our faithful understand that stewardship is about much more than money.  Stewardship is a holy way of life. It is about giving back to God, in love, the first fruits of our time, talent, and treasure.  It is about trusting in Jesus, following the truths of our faith, and allowing ourselves to be guided by the teachings of the Church.

Good stewardship also results in wonderful blessing to us.  For years, now, our diocese has offered Charitable Gift Annuities (CGAs) because they are a particularly good vehicle for increasing the annual disposable income for senior parishioners.  They are also simple and there are no legal costs to the participating annuitant.

Charitable gift annuities are essentially a combination of an annuity to you and a gift to your Church. For senior persons, the rates of return can be 6%, 8%, 10% or higher based upon your age and whether or not it is a single life annuity or a two life annuity (to cover spouses).  The rates are fixed.  You would receive no more or no less each year.

Part of the annuity payment you receive is a return of your original investment.  The other part is earnings.  This is all factored into the calculations.  The good news is that the portion considered a gift often results in very significant federal income tax deduction for the current year. If you can’t use the whole deduction in that tax year, the IRS allows you to carry it over for five years!

There is more good news too.  When you receive your yearly annuity payments (quarterly, semi-annually, or annual, based upon your desire) part of the payment you receive is tax free, part of it may be taxed at the lower capital gains rate, and part of it would be taxed at your regular federal tax rate. 

Think about this.  If you have your money currently invested in certificates of deposit (CDs) at today’s rates, you are probably earning a maximum of two percent on a one year CD and four percent on a five year CD.  So, being generous, let’s say the average CD rate is three percent.  Let’s also say, based upon your age and life expectancy, our diocesan charitable gift annuity was paying you 6 percent.  You would be doubling your current income on that investment and getting a probable significant income tax deduction on your federal tax return.  Moreover, you would not get taxed on a portion of the annual annuity payments you receive.  In essence your effective rate of return might be 7 percent or 8 percent. 

Your annuity payment is for as long as you (and your spouse) live.   If you outlive your life expectancy per the tables, each year thereafter you would pay income taxes on the entire annuity – rather than just a part of the annuity – from that year forward.

You can take out charitable gift annuities with the diocese as often as you want and for as much as you want.  Rather than cash, you can also donate property which has risen in value since you purchased it.  The diocese would cash that in and invest it. The appreciated property might be stock and bonds, land, a home, etc.  Obviously the diocese would have to agree to the property you are donating, but it can be done if it works for both sides.

When you ultimately die, the diocese will take the balance of your charitable gift annuity, plus possible increased earning from the investment of the monies you contributed, and transfer that to the parish or diocesan entity you have designated. Everybody wins!

For seniors, this is excellent stewardship of treasure. You get a significantly better return on your investment while you are alive and you earn merits for the afterlife. Your parish uses the money for the purpose you have designated and your legacy lives on.  That’s good stewardship of treasure!

For more  information information, Heartland Parish of Ellis County parishioners can contact me at 785-625-7356.  All other parishioners within the Diocese of Salina can call Fr. Louis Mattas @ 785-263-7623.