Photo of Ray Ferrara CFP Ray Ferrara CFP Jul 09, 2020

For some people, it is not enough to generate wealth for themselves and their family. They want to support charities to help make the world a better place. If this is your goal, we applaud your decision and are thankful for philanthropic intent.

Supporting charitable organizations is more than beneficial for the public. It can also be beneficial for you. There are many different ways to make charitable contributions that benefit you differently. One common giving vehicle that many donors use is to open a charitable gift annuity with a non-profit organization. 

A charitable gift annuity is an arrangement between yourself and a non-profit organization in which you contribute to the charity, but you receive regular payment for life from the organization based on the value of assets you transfer to them. There are many benefits to starting a charitable gift annuity. We would like to go over four important ones that we think you need to know right now:

1. Guaranteed income

When you establish an annuity, you receive a fixed income that is guaranteed by the charity for life. The organization is unable to back out of payments or change them unless of course they go out of business. Therefore, you want to choose a charity with a strong balance sheet. 

2. Lower income tax liability

You get a charitable deduction at the time you contribute the money. However, because you will receive payments over your lifetime, the deduction is not 100% of the money contributed. In addition, when the fixed income payments are made, part of the income is considered a partial tax-free return of your original contribution. This helps lower your annual tax liability, which helps you save on how much you owe in taxes each year.

3. Retirement income supplement

The guaranteed fixed rate of income from the annuity can supplement your retirement income. This is beneficial for people looking for ways to make their retirement nest egg last longer so they can live more comfortably.

4. Estate tax savings

You can create a gift annuity for the benefit of a survivor through a will or an estate plan. Your taxable estate will be reduced by the amount of the deductible portion of the gift annuity for estate tax purposes, but income is paid to your heir during their lifetime.

Talk to a ProVise CFP® professional about your charitable giving plan

Charitable giving without a plan is like throwing money in the wind. Wherever it lands, someone is going to be happy to find it, but there is no way for your gift to benefit you. At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can help you make charitable giving decisions that benefit you and the public.

We work closely with you and take the time to get to understand your financial circumstances, your goals and the beliefs that drive you. We use what we learn to help you make a charitable giving strategy that will benefit you and the public for years to come.

We can create a written plan for you at a fiduciary standard of care. All of our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about creating a charitable giving strategy? Contact ProVise today to schedule a complimentary consultation.