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Annuity payouts staying the same

by The NonProfit Times - May 9, 2013

The immediate and deferred gift annuity rates for 2012 will remain in force for 2013, according to the American Council on Gift Annuities (ACGA) in Smyrna, Ga. The rates that have been effective since January 1, 2012 will remain in effect until further notice.

“The economy has not moved enough based on our long-term matrix to justify a change in the rates at this time,” said Lindsay Lapole, chair of the ACGA board of directors.

The rates calculate the payout a donor will receive per year when setting up a charitable gift annuity (CGA). CGAs are a planned giving vehicle that allows a donor to make a gift to a charity in return for the charity paying the donor a fixed sum. Most organizations pay out on a quarterly basis, said Lapole.

The ACGA’s rates are suggested, but according to the ACGA Rate Report, some 97 percent of charities adhere to them. The rates are a percentage of the total gift and determine the payout to the beneficiary (also called the annuitant, usually the donor). The rates are based on the donor’s age at the time of the gift and are locked in at that time. For many charities, a CGA must be at least $10,000 and payouts can be immediate at age 65, though this varies among nonprofits.

Lapole said the payout rates are traditionally set at the ACGA board meeting in April, and changes go into effect on July 1. “It’s to benefit charities. If they have proposals out, the donors will have time to close proposals under the existing rates,” he said. Vendors who produce CGA-related software and printed materials also need time to update their materials, he said.

The ACGA looks at annuitant mortality rates, average investment returns and average expenses associated with maintaining a CGA program, among other metrics, when considering whether to change the payout rates. At the most recent ACGA board meeting, “It was business as usual as the rates relate,” said Lapole. “There was nothing unusual or extraordinary.”


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