Kansas-Nebraska Conference of Seventh-day Adventists

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Gift Annuities
Gift Annuity
Charitable Gift Annuity
A gift annuity is a contract under which a charity, in return for a transfer of cash, marketable securities, or other assets, agrees to pay a fixed amount of money to one or two individuals for their lifetime.
A person who receives payments is called an “annuitant” or “beneficiary.” The payments are fixed and unchanged for the term of the contact. The annuity payments are not called “income” because a portion of each payment is considered to be partial tax-free return of the donor’s gift, which is spread in equal payments over the life expectancy of the annuitant(s).
In a charitable gift annuity, the contributed property or gift is given irrevocably and becomes part of the charity’s assets. Accordingly, the payments are a general obligation of the charity. The charity’s entire assets back the annuity, not just the property that has been contributed. Unlike a trust, annuity payments continue for the life/lives of the annuitant(s), not simply as long as assets remain in the Gift Annuity Fund. Payments can be made monthly, quarterly, semi-annually, or annually. Payments made from a charitable gift annuity are fixed from the outset. They will neither increase nor decrease, no matter what happens to interest rates or the stock market. The charity is contractually obligated to make the payments, even if it has to dip into its general funds to do so.
Families who use a charitable gift annuity to supplement their income have definite charitable intent. So much so that, if they could afford to do so, they would probably donate as an outright gift the entire amount paid to the organization. But they need to make some provision for income while alive.
(Charitable Gift continued)
The interest rates given by charities on gift annuities generally track the rates recommended by the American Council on Gift Annuities and have been computed to produce an average “residuum” or gift to the organization at the expiration of the agreement of approximately 50% of the amount originally donated under the agreement. Consequently, the rates are a little lower than, and are not in competition with, any rates offered by commercial insurance companies. It should be noted, however, that with a charitable gift annuity, there is a substantial tax deduction when the gift is made and balance goes to the charity. With a commercial insurance company annuity, there is no charitable deduction. Besides, who would want the balance in the account, if any, to go to an insurance company?
In her counsel, Ellen White recommended using the concept of a charitable gift annuity. “There are those among us who have a surplus of means, but they think they 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 let them donate the principal to the cause and work of God. Thus they will return to the Lord that which is His own.” (Australasian Union Conference Record,December 1, 1900, underlining by editor.)
A year later she made a similar recommendation with some additional details. “We wish that all who are becoming old and feeble would make a wise disposition of their means, giving freely back to God that which is His own. Some need the interest on their money to support them while they live. These can lend their money at a reasonable interest to our publishing or medical institutions, and make arrangements that it shall be used in missionary work after their death. Wise and faithful men should be chosen as their stewards, and clear and thorough work done to ensure the use of their means in the very way that they wish. Then they will know that their treasure is to be used to warn the world of its coming doom. We have no time to delay” (TheGospel Herald, December 1, 1901).

Please feel free to contact me with any questions you may have for yourself or a loved one.

Norman Zimmerman
Trust Director
e-mail address

Nebraska call: (402) 488-2323

Kansas call:  (785) 478-4726