Does the term “Charitable Gift Annuity” sound familiar? Perhaps you’ve received a pamphlet in the mail or watched a video about its benefits. But what, exactly, is a CGA, and why is there so much buzz around it? The short answer is, it is good for you, the ministry supporter, and it is good for Adventist World Radio—a win-win!
This article will give you some good information so you can decide if a CGA is right for you.
Simply put, a CGA is an agreement between Adventist World Radio and YOU, the supporter. The agreement is that you will give a one-time donation, and Adventist World Radio will pay you back a fixed amount for the rest of your life.
Notice that we are talking about a gift. The donation is irrevocable, so this is not an investment account. You will receive back a periodic payout according to the agreement, but you cannot make withdrawals. So the funds you give for a CGA should be money in savings that you will not need for your living expenses.
Good for You
One of the most attractive benefits of a CGA is the high payout rate you get back from your donation. Many people today are receiving a very small return on their money. With a CGA, the payout percentage is based upon the age of the supporter, so younger supporters will receive a lower percentage, while our more “chronologically gifted” supporters will receive a higher percentage. For example, the current rate gives a single 73-year-old supporter 6.4% per year back on their donation, and a 90-year-old supporter will receive a 9.7% payout.
Another real benefit is that the payment is absolutely fixed; it will never go down, no matter what happens to the stock market, the economy, or the political climate. The CGA is a great alternative for people who do not like the uncertainty associated with investing and potentially watching their savings erode month after month.
There are some significant tax benefits as well. For instance, you get a sizeable tax deduction the year you do the CGA. However, it is not dollar-for-dollar for the full amount, since you are going to benefit substantially from the payout for the rest of your life.
Another tax benefit is that under most circumstances, only a portion of the money you receive back is considered taxable income; most of it is tax-free. So it is possible to significantly increase your total income while at the same time reducing your taxable income. It is not unusual for the annuity to pay out $1,000 and have only $300 of that amount be considered taxable income; the other $700 is tax-free. (Note: This provision ends when the estimated life expectancy is reached.)
So what is the CGA minimum amount? You may initiate a CGA at Adventist World Radio for only $10,000.
If it is a two-life CGA (usually husband and wife), the payments will remain the same as long as either is alive. So even after the first spouse passes away, the survivor will continue to receive the exact same amount for the rest of their life. Note that the rate paid on a two-life CGA is a little lower than on a single life, but the two-life CGA is guaranteed as long as either one is alive.
When you do a CGA, you can be assured that you will be leaving something to the ministry in the end. Leaving a gift through a Will or Trust is a wonderful plan, but there is a degree of uncertainty if anything will be left. And in some families, leaving a gift through the estate plan can cause some real problems with the other heirs.
Good for the Ministry
One aspect of the CGA that should not be overlooked is the impact it has on this ministry. By having a number of CGAs in our portfolio, we can be sustained far into the future, even if the current level of giving decreases. Many a ministry has been able to remain stable and viable during bad times simply because they had income from CGA maturities. This is especially significant when we recognize that our children and grandchildren may not have the same conviction to support ministries that we have.
The only aspect of a CGA that could be considered a downside is the fact that it is fixed, so it is possible for the purchasing power to be eroded over time by inflation.
“But what would happen if our entire economy collapsed?” you might ask.
That has never happened before, so no one can answer that question with certainty. However, most people have the attitude that if they are going to lose all their money anyway, they would rather have lost it while it was in the hands of a godly ministry rather than a corporate financial institution. And if things start looking bad, you can always do “early termination”—that is, ending the contract and turning the funds over to the ministry immediately.
Ellen White wrote:
“There are those among us who have a surplus of means, but need it to sustain themselves. Let matters be arranged that these persons shall have interest on their money as long as they shall live, and [then] let them donate the principal to the cause and work of God.” (Australasian Union Conference Record, Dec. 1900)
And in another place she wrote:
“Some need interest on their money to support themselves while they live. These can lend their money at reasonable interest to our institutions, and make arrangements that it shall be used in missionary work after their death.” (The Gospel Herald, Dec 1901)
When she made these recommendations, she probably had no idea that she was perfectly describing a CGA!
A Charitable Gift Annuity can increase your income, avoid the uncertainty usually associated with investments, give you some favorable tax benefits, and place the funds into the hands of Adventist World Radio to share the Good News in the hardest-to-reach places on earth!
If you’d like to learn more, please contact Jeff Wilson or Bill Hay, who will be happy to help you set up a Charitable Gift Annuity and answer any questions you may have.
Or reach Jeff and Bill by mail at: Adventist World Radio, 12501 Old Columbia Pike, Silver Spring, MD 20904.
By Bill Hay, Adventist World Radio