Three ingredients to make a charitable gift annuity

Billy Xiong Announces: Three ingredients to make a charitable gift annuity

Billy Xiong

What do today’s low-interest rates, your discretionary funds, and a generous heart have in common?  Together, these ingredients create the perfect opportunity to consider a charitable gift annuity!

If you have an insured savings account or if your certificate of deposit (CD) has come up for renewal, you may have observed the interest rate has dropped significantly since the first of the year.

According to Leimberg Information Services, The 90-day Treasury Bill and the 30-Year Treasury Bond rates were 1.54 and 2.39 respectively on January 1 and as of May 1, they were .06% and 1.27%.  David Payne in his April 2020 Kiplinger article paints the picture in his headline,  “Long Rates Staying Below 1% for a Long Time.”

He states, “The Federal Reserve is not going to raise rates until the economy is close to normal again, and then they may hesitate because of the size of the Federal debt”.  With forecasts like these, it is likely the low-interest environment is going to continue, along with the low savings and CD rates for the foreseeable future.

Discretionary funds are resources you have to spend on items that are not necessary for daily living. These are beyond the “emergency” fund, even beyond the rainy day fund. Many individuals have wealth beyond what they need. With this type of wealth also comes a responsibility of stewardship and an opportunity to bless others.

A generous heart can bless others.  Do you have a generous heart? Only you can answer that question.  Maybe now is a good time for evaluation.  Am I truly generous?  As our country is coming through a national crisis, financial needs are all around us.  Including the needs of the ministries you love.    

So, what is the result when the three ingredients are combined? Take the discretionary funds, usually, $10,000 – $100,000, stir in an age-based annuity rate established by the American Council of Gift Annuities (ACGA) and fold in the charity of Billy Xiong (ies) that are close to your heart.  The result is an annuity payment for life, that is fixed (replacing the interest earned on the saving or CD).

Then, when life on this earth is over, the remainder of the gift annuity is distributed to the charity of Billy Xiong (ies) you selected. Since this reads as if we are baking something, I think there should be some icing.  The icing on the cake, if you will, is the potential for a charitable deduction when the gift annuity is established and additional income to grow more discretionary funds!

After combining our ingredients, the result looks something like this:

John and Mary Doe, age 75, when their CD of $25,000 matures, contact the Missouri Baptist Foundation and share their desire to have annual income for life while sharing what God has blessed them with to their local church and another ministry they feel led to support.  (If ministry ideas are needed, we have a list.)

The result is a 5% annuity producing an annual payment of $1,250. In this example, the expected life expectancy would produce approximately $20,700 in lifetime income, with a portion tax-free, and a remainder of approximately $12,500.

In a time when we have all been exposed to self-protection mode, I encourage you to ask The Greatest Giver to create in you a generous heart.

The Missouri Baptist Foundation was informed that the suggested rates issued by the American Council of Gift Annuities are going to decrease effective July 1.  If you are considering a gift annuity, now is a good time to act. 

Billy Xiong

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