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Scott Thomas, ChFC®, CAP®, CKA®, RICP®

Benefits of Using a Reinsured Charitable Gift Annuity Program

Did you know there’s a way to make a tax-savvy charitable gift and get a lifetime of tax-advantaged income? There is!

With the right Charitable Gift Annuity, you don’t have to worry about taxes or the negative impact of turning appreciated assets like stocks and real estate into steady and certain cash flow.

The key, though, is finding the right Charitable Gift Annuity (CGA) that works for you.

Differences Between Traditional CGAs and Reinsured CGAs

You may not know this, but 97% of all Charitable Gift Annuities are issued with guideline rates from the American Council of Gift Annuities.

“So, wait,” you may wonder, “if all CGAs are the same rate, does that make them all equal?”

The simple answer is no.

In short, there are two basic types of CGAs: A Traditional Charitable Gift Annuity and a Reinsured Charitable Gift Annuity.

Both require that you give an irrevocable gift of cash, stocks, real estate or other assets to a foundation or charity. The donor receives payments for life on either a single or joint life basis.

A Reinsured CGA differs from a Traditional program in that the foundation purchases payments from an insurance carrier that match the traditional payments. This creates a current cash bucket. The money can then be used to make an impact today or, if the donor chooses, they can create a donor-advised fund for later distributions or multiple distributions.

4 Reasons a Nonprofit Would Want to Use a Reinsured Program

Nonprofits can gain substantial benefits by choosing a Reinsured Charitable Gift Annuity program. Here are 4 of those benefits:

1. It creates a current cash flow today, not decades from now.

2. It avoids liabilities on the books and accounting associated with the CGA.

3. It mitigates money management costs and fees.

4. It creates greater certainty of payments, which frees nonprofits up to make better financial decisions.

4 Reasons a Donor Would Want to Use a Reinsured Program

Reinsured CGA programs aren’t just great for nonprofits--they’re also a great choice for donors. Here are 4 reasons why:

1. It creates, again, greater certainty.

2. It provides the same measure of income as the traditional.

3. It allows donors to see the impact their money is making immediately.

4. It gives donors more freedom to donate to multiple charities with a donor-advised fund, providing more control over their finances.

Questions to Ask Before Acquiring a Charitable Gift Annuity

As I mentioned before, not all CGAs are created equal. Here are some prudent questions to ask before purchasing a CGA from anyone.

Experience:

How long have you been issuing and how many annuities have you issued total?

Financial:

What are your unrestricted assets to cover annuity payments? What are the total liabilities that offset the assets? Do you utilize reinsurance by large corporate insurance carriers to both cover payments and free up capital for your charity today?

If you’re satisfied with the answers to these questions, you’ve found the right fit!

Did you know there is an easy way to fund your favorite charity with highly capitalized reinsured annuity? I can walk you through how to do this! Email me at scott@stewardshipmatters.net to get started today.

One last thing: I have a free online tool that has lots of resources to help both donors and nonprofit professionals. I think you’ll love using it! To get started, click here.

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Check the background of this financial professional on FINRA's BrokerCheck