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Annuities earn money

Staff Writer

Direct donations and leaving a portion of an estate for charitable purposes are well-established giving practices, but gift annuities are an alternative more donors are turning to as a way to get a return on their charitable investment.

A gift annuity provides a donor with fixed income payments based on the amount of the donation they make and their age. Those payments make gift annuities an attractive investment alternative.

Community foundations in Hillsboro, Peabody, Florence and Goessel are affiliate members of Newton-based Central Kansas Community Foundation, and the affiliations give them the option to market gift annuities to potential donors, CKCF Executive Director Sandra Fruit said.

“Obviously when you have a small start-up foundation when resources are pretty tight, without being a partner with a larger organization, they can’t provide gift annuities,” Fruit said.

“I don’t know that we have any gift annuities at this point from Marion County. It could be that we haven’t marketed it properly,” Fruit said. “When you take foundations like Hillsboro and Peabody who have been out there for eight to 10 years, they’re ones that are more likely to have interest.

“If they have donors that are interested, they can give us a call and we’ll facilitate that for their donor,” Fruit said.

“During this economic environment, this is a good time to consider gift annuities. They are very popular right now,” Kansas State University Foundation Senior Director of Gift Planning Kent Sedlacek said.

The interest rates paid on gift annuities by the KSU Foundation are those recommended by the American Council on Gift Annuities, Sedlacek said.

“The older the donor, the higher the annuity rate. At age 60, you’re looking at 4.4 percent, at age 70 a 5.1 percent rate of return, and at 80, 6.8 percent,” Sedlacek said.

CKCF also uses the ACGA recommendations, Fruit said.

“I’m sure there is a time when bank certificates of deposit will come back,” Fruit said. “In recent years those CDs haven’t generated much income, and a gift annuity can substantially increase that donor’s income.”

Sedlacek said donors typically establish gift annuities with cash or appreciated securities.

“They provide lifetime income and a charitable deduction for the donor,” Sedlacek said. “This also allows a donor to determine how they want their funds used.”

Organizations frequently have a minimum donation amount for establishing a gift annuity. Both Sedlacek and Fruit said $10,000 is the amount their organizations use.

St. Luke Hospital Foundation Executive Director Roger Schroeder said gift annuities haven’t been a part of the foundation’s fund-raising efforts in the six months he has been there.

“I haven’t had to deal with anything like that,” Schroeder said. “Gifts given in memory of someone, we see those kind of things come in quite frequently. I think it depends a lot on the situation in which they’re donating.”

Schroeder was uncertain if the hospital foundation could offer a gift annuity option, but said he would research the possibility if approached by a potential donor.

“It would definitely be something I would have to dig into. I’d have to see if it’s something we can do, and I’d have to consult the board, which would make the actual decision,” Schroeder said.

ACGA recommends directly contacting the fundraising office of the organization an individual wants to donate to in order to discuss gift annuity possibilities. General information about gift annuities can be found at the ACGA website: http://www.acga-web.org.

Last modified April 19, 2012

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