Most people give back to help causes that are important in their lives. That giving back can take many forms. Some people volunteer their time, some give items or in-kind work or materials, and others give money. All of these forms of giving can help organizations carry out their mission, while making the donor feel good about helping to make a difference. Being a banker for 32 years, I have seen all these forms of giving in action, particularly in the form of giving money.
One little known -- but quite advantageous -- way to give back is through a gift annuity. Gift annuities, typically used for more sizable donations, enable a donor to give a portion of their money to an organization, get a tax deduction and also receive income on that money during their life or for a fixed period of time. This approach can be a win-win situation for the receiving organization and for the donor. The organization has access to the donated money and the opportunity to recognize the donor for their gift. The donor can make certain their wishes are carried out, feel good about meeting a meaningful need and still receive income for the designated amount of time.
Let’s look at a normal cash donation. A donor gifts $25,000 to the hospital. The donor no longer has the money and therefore does not earn any interest or return on it.
Some individuals have the capacity to make a sizable donation this way, but many folks do not. This is where a gift annuity program can help. Take that same scenario: the donor gifts $25,000 to the hospital through a gift annuity. The donor and the hospital create an agreement* in which the hospital pays the donor a fixed amount throughout the year, for example, 3 percent of the $25,000 on a quarterly basis. Effectively, the donor continues to earn the income on the asset as if they never made the donation. The hospital can use the original gifted money for its intended purpose but must carry the liability for the future 3 percent payments on its financial books.
Gift annuity programs are typically used by larger organizations. As a donor, you are receiving a promise to be paid that 3 percent (in the example above) from the organization and most donors want to be certain the receiving organization is strong enough to honor that commitment for the remainder of their life or the fixed period of time.
Kennebec Savings Bank offers gift annuities with MaineGeneral Health and has a local team that specializes in trust and investment management. For you, that means access to professionals who are extremely knowledgeable with years of experience in managing millions of dollars.
We understand these decisions are about more than just numbers and we can help you navigate the planning and carrying out of your wishes, while helping our community with a legacy gift.