As you know, The American Council on Gift Annuities (ACGA) recently announced a new gift annuity rate schedule, effective January 1. For a detailed explanation of this new schedule, go to http://www.acga-web.org/. Also, a good summary can be found on the PGCalc site here and here.
As usual, there has been an unreflective stampede with some vendors hawking postcards urging donors to act now before rates go down in January. We think this is a bad idea. Practically speaking, there is simply not enough time to design, print, and mail postcards and allow donors sufficient time to make a decision and complete a gift before December 31.
More importantly, such a promotion is potentially deceptive. Although the rate reductions in the new schedule are significant, what is not mentioned in most accounts is that the corresponding charitable deductions are also significantly higher. So, should donors hurry to take advantage of higher rates now? The responsible answer is "it depends" on whether the donor is willing to trade a lower annual payout for a higher charitable deduction.
Here are two examples:
GIFT #1: a $25,000 gift annuity based on the life of a single annuitant age 75.
GIFT #2: a $100,000 gift annuity based on the joint lives of two annuitants, age 80 and 75.
The bottom line is that it is not immediately obvious what the best course of action is without some discussion. Even though the new annuity rates are lower in the new schedule, they are still much higher than conventional returns on fixed rate instruments anyway.
In any case, if you wish to notify your donors of this change promptly and economically, we recommend a personalized email campaign, which we would be happy to expedite for you for a very modest fee. Those of you who are familiar with our planned giving email marketing and other electronic services know that these are high quality emails, custom designed for your specific needs.
For more information or to start your email campaign, please contact Allison Keech Sanka, Director of Operations and Internet Services, today.
Posted by: Sam Caldwell
