Giving Without Going Broke

If the widow that Jesus praised for giving her last mite to the synagogue were alive today, she might have better options -- like putting all of her savings into a Charitable Gift Annuity that would give her synagogue immediate access to all of that wealth and still provide herself with an income for life.

Is that a slight exaggeration? Maybe. A mite won't go very far.

However, according to the United Methodist Foundation of Northern Illinois Conference, Inc. (UMF), "A gift annuity provides you with a charitable gift and a guaranteed life income payment for yourself and/or another person." The UMF implies that the Charitable Gift Annuities provide an additional bonus when they say that the "Property passes to (the) charity with no probate fees. There are also no estate taxes." At times of sorrow, any reduction in paperwork is a boon. When the last beneficiary passes on, and has no more need for the annuity's income, the charity stops making payments. As the old saying goes: "You can't take it with you."

ADVANTAGES OF CHARITABLE GIFT ANNUITIES

The main advantages of Charitable Gift Annuities include helping worthy causes, reducing income taxes, and taking care of yourself, or a loved one, or both. Their popularity has risen now that interest rates on CDs and most other fixed income investments have plunged.

According to the Internet search engine Google.com, there are approximately 8000 web sites that provide information on Charitable Gift Annuities. Alas, you'll see more duplication of sites than you could get out of a Xerox machine.

Prominent church organizations accepting Charitable Gift Annuities include the Episcopal Church Foundation, the Presbyterian Foundation, the Salvation Army, and the Church World Service.

Charitable Gift Annuities help reduce your income taxes. They are especially effective when you give stocks or property that has appreciated to the point that you don't want to sell for fear that the government will take most of your profits. If that stock is exchanged for a Charitable Gift Annuity, the tax on your profits will drop and you will get a tax write-off for charitable giving.

Taxes on the sale of appreciated property often skyrocket when you are on Social Security. Social Security income is subject to taxes once you pass a specified income. The greater the income, the more of your Social Security gets taxed.

If your church is not set up to handle gift annuities, it can work with organizations that have experience in that field. As an example, the Church World Service currently handles tax-beneficial transactions through the United Methodist Foundation of Northern Illinois (UMF). The UMF handles the paperwork and oversees the investments for a small fee.

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