How Does A Charitable Gift Annuity Work?

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Hi there, Stan The Annuity Man, America's annuity agent licensed in all 50 states and Puerto Rico,

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the founder of contractual guarantees only. We only look at the contractual guarantees of the policy.

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Today's topic is a very good one: How does a charitable gift annuity work?

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You're saying, "Stan, if I'm not mistaken, you don't even sell charitable gift annuities. So,

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this is somewhat philanthropic of yourself to discuss charitable gift annuities."

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You are correct, but they are an important part of the annuity world,

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and you need to know about them because that might fit your situation.

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Alright? We're going to talk about them after this.

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So, charitable gift annuities. What are those, Stan The Annuity Man?

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I don't find them on your site. That's because we don't sell them.

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But yeah, we are doing a new site. You're going to see that soon.

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Check the date. And we're looking at putting that on our site so it can help

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people. Because charitable gift annuities are not sold by agents or advisors or anyone like that.

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And some of you out there are going, "Oh my gosh, that sounds fantastic." Well, it kind of is.

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Charitable gift annuities are offered by universities, 501(c)(3), which is a nonprofit,

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those types of organizations. So, good old State University,

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if you went there, probably has a charitable gift annuity program. The Cancer Society,

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Salvation Army, those types of places also have charitable gift annuities.

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Your favorite charity, whatever that is. If it's for, you know,

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three-legged cats with one eye, they probably have a charitable gift annuity program.

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And what does that mean?

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With most of them, they're income products. So, you have to look at the financial stability of

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the charity, but a lot of these charities are pretty strong. But what they do is they

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give you the lifetime income stream, but when you die, whatever money is left goes to the charity.

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Or, if you want, some of them offer a fixed-rate annuity like a MYGA. You get the interest,

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and when you die, the charity gets the money. If I said that in the previous example,

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I apologize. The charity gets the money. Period.

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Now you go, "Well, that's great. What else?"

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There is a big "what else."

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For them offering either that interest payment or lifetime income payment, okay, so it's like buying

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an immediate annuity but through the charity, you get a huge, and I do mean huge, tax break.

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Okay? The IRS loves it. They don't love a lot, but they love this.

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So, you're going to have to work directly with your charity of choice or the university.

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I worked with a lot of universities. I'm not going to mention them because, I don't know, they could

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either get a lot of money sent to them or be like, "Well, you're working with Stan. My God."

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To set up their charitable gift program, okay, charitable annuity gift program.

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And it's a good money raiser for the universities and the charities because they're

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going to give out payments. They're going to guarantee payments for as long as you live.

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But they're doing the same exact thing as life insurance companies do that issue annuities.

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They're looking at your life expectancy. It's not some, you know, Wild Wild West.

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It's regulated by the, I think it's the American Association of Charitable Gift Annuities.

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If you just Google "charitable gift annuity association," it's a very, very good organization

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that oversees all of this to make sure that the charities, 501(c)(3), universities, hospitals,

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etc., are doing it the right way, are in compliance, can back up the claims, etc.

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So, if you've won the game out there and you have lots and lots and lots of money, but you

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have a charitable thing inside of you that wants to give money away, or if you just don't have a

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lot of beneficiaries, you've never been married or whatever, no kids, this is a thought for you.

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How do you get lifetime income and then leave money?

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We'd love to run a side-by-side comparison. In other words, if you said to us, "Hey, Stan,

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you know, Cancer Society or American Heart Association or whoever,

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or good old State University I went to, my alma mater, they're offering this."

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We'll run a side-by-side immediate annuity comparison to what they're offering and then

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look at the tax ramifications of each. And then you can make a good decision.

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But most people don't know about it because agents don't talk about it because agents don't

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get paid. And there's no under-the-table agreement between me and a charity,

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or me and a 501(c)(3), or me and a university that's offering a charitable gift annuity.

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When I do that type of consulting, I do it pro bono. I do it because it's the right thing

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to do. And I do it because people need more lifetime income. They need an income floor.

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We always talk about income floor: Social Security, pensions,

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lifetime income annuities, and now you can put charitable gift annuities into that.

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And it doesn't have to be with everything you have, but it could be with a portion.

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So, let's just say you want to buy $500,000 worth of single premium

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immediate annuity lifetime income payments. You could do half of it

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in a traditional SPIA and then the other half in a charitable gift annuity. So,

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leaving half to the charity over here and the other half to your beneficiaries.

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It's a thought.

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And in the fact that you're watching this, you probably went, "What is a charitable gift annuity?"

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You know, a lot of you out there have invested in what's called donor-advised

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funds. Similar to this a little bit in the fact that it's a charitable-type situation,

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but I really, really like this version of it.

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I will tell you, one of the universities I recently did some consulting with, just

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good people. I'm not political. It's just a nice group of people that run

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the college, is Hillsdale College in Michigan. And I did work with

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them on their charitable gift annuities and just making sure everything was in order.

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Super people. Dr. Larry Arnn, super, super guy.

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But they raise a lot of money because people want to give money away, but they also need

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some income until they die. And when they die, they're okay with the money going to Hillsdale.

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That's a great example. Fill in the blank with Hillsdale to your charity of choice.

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If they're a little right-leaning and you're left-leaning, choose your school. Doesn't matter

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to me. I don't care. I'm contractual. I'm not political. I'm contractual.

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Everything to me is about the contractual guarantees.

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And by the way, these charitable gift annuities, they are contractual. It's a contract, in essence,

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between you and the charity, you and the university, you and the 501(c)(3).

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It's something to look at, okay?

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Now, we can't provide charitable gift annuity quotes. The actual charity,

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501(c)(3), university, hospital, whatever, can. But we can help you choose the right structure.

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If they don't have the person there that does that, if they just have a

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young kid that's a junior in college helping with it, call me. I'll help.

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But I just want to put it in the back of your head. Charitable gift annuities are great.

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Again, I apologize for not having that organization's name. Hopefully my editors,

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during this, will put it above me and make me look smart.

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But just Google "charitable gift annuity association." It'll pop up.

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You can contact them. You can see all their charts and graphs and who

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offers it and what the payout rates are and all that stuff.

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It's really cool. And those are great people up there, okay? I've spoken to

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them a couple of times. They know that I do these videos. I've mentioned them in my books before.

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By the way, you can go to my site and get my books if you want to, at theannuityman.com.

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But charitable gift annuities, again, you have to ask them what they offer. But most

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will offer lifetime income payments, and some will offer both lifetime

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income payments and interest payments, kind of principal-protection-type stuff.

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But most are lifetime income payments.

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So, if you're looking to build that income floor, maybe a charitable gift annuity is something for you.

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Alright? I know what you're saying. You go, "Stan, right when I was this close to

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just hating you to death, you go and do something like that and redeem yourself."

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I know. I know what you're saying.

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But I do want you to understand everything that's out there, okay?

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Go to my site, theannuityman.com. You can run quotes 24/7/365.

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If you have further questions on this topic, shoot me an email: [email protected].

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I will respond. I promise, regardless of how many I get.

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I mean, I've been married 37 years, so that's kind of what I do.

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I'm passionate about this out here. This is why I still do it. I want

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people to make good decisions on their terms and their time frame.

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One last thing. Above my head, a spinning clock is going to be a

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video that you need to watch about how annuities are commodities.

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Not one's better than the other. You buy them for the rating and the guarantee.

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We shop all carriers here at The Annuity Man to find that for you.

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So don't be swayed by names, logos, marketing gimmicks,

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whatever. It's a commodity product that you quote across all carriers. Okay?

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My name is Stan The Annuity Man. Taking a step back, I heart contractual guarantees.

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And by the way, charitable gift annuities are contractual as well.

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See you next time.