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Perfect Storm in 2021 Giving Strategy

February 25, 2021

What makes for a charitable giving perfect storm?

  1. Needs are greater now
  2. Taxes on Investments and Earnings Increased
  3. Uncertainty in stock & bond markets
  4. Super low bank CD rates
  5. Need for steady cash flow

COVID, Unemployment, Higher Partial Employment, Medical and food needs have all increased significantly. Mental and spiritual health declined and in need of resources. The need for positive messages and positive solutions is critical and all of these need funding or support by generous people.

One proven solution for 100+ years is the Charitable Gift Annuity. While the recommended rates are set by ACGA and 98% comply, the differences in benefits to both donors and charities varies a lot.

Both donors and charities like to impact of dollars today and doing so while not harming cash flow needs. There is a viable solution worth looking into to provide now significant charitable funding and provides a lifetime of tax advantaged income with certainty.

Here is example:

The payout cash flow is several times that of other conservative fixed income vehicles. Deferring capital gains over long period can be advantageous not to trigger higher taxes like special taxes on Social Security. Lastly, when donor does this we create charitable gift today based on donor’s age of 18.27% or $18,270 today to make impact today. If you were to compare this to commercial annuity there are several things to consider- impact today funding $18,270 from $100,000 gifting would only be $81,730 of funding. Next there is a income tax deduction opportunity here of $36,520 and if in 22% tax bracket provides $8,034 of tax savings today. If the $90,000 of capital gain were recognized in one year (selling asset then trying to buy annuity) then Social Security extra Part B taxes could apply about $1000 of extra taxes for a one-year period thus reducing Social Security Payments.

Reach out to me today to discuss what is possible for you and your favorite charities to make impact today for you and them.

Scott Thomas

(407) 644-9411 Ext.2