Charitable gift annuities

Published on March 23, 2005

Creating a pension while supporting a cause.

By Ret Boney

Helen Doss Reed has a personal relationship with cancer, and a desire to see it eradicated: She beat cancer twice, lost her first husband and one son to the disease and her second husband’s daughter died of leukemia.

So when Reed, 89, was making financial decisions about her last years and her estate, one of her goals was to contribute to the American Cancer Society.

Another was to create a pension of sorts to provide income should her husband, who has his own pension through his former employer, die before she does.

To do that, Reed, who lives in Yuba City, Calif., established several charitable gift annuities with charities, including the American Cancer Society, Salvation Army and The Kidney Foundation, totaling almost $100,000.

“We were interested in several of the things that address various diseases, and cancer was at the top of the list,” she says.  “We have always been in favor of charities and have given small amounts to charities.  We felt the children didn’t need all that was left.”

Reed, mother of 12 adopted children, most of whom she says were considered unadoptable because of their mixed race, and grandmother of 37, quips that she is spending her grandchildren’s inheritance – much of it on charity.

She dedicated her first charitable gift annuity with the Cancer Society to breast cancer research, with a value of $5,000, an annual payout to the Reeds of $555 and a charitable deduction of $2,583.

The second annuity, with a value of $10,000, was made in memory of her husband’s daughter and dedicated to leukemia research, providing the couple with an annual income of $1,080 and a one-time deduction of $5,185.

The Cancer Society added Reed’s gifts to its annuity pool, which contains donations ranging from $5,000 to donations in the hundreds of thousands of dollars, says Gillian Green, executive director of the group’s planned giving business unit.

It then invests the funds in the annuity pool, pays out income to the recipients, and uses the money for purposes specified by the donors only after their deaths, she says.

Planned giving has become a top priority for the Cancer Society over the last several years, Green says, and is now one of the largest sources of the charity’s income, warranting a planned giving staff of about 53 planned giving officers across the country.

And for donors like Reed, the approach has several benefits, including supporting a charity, providing needed personal income and decreasing tax liability.

“If you can afford to do it, give outright,” says Reed.  “But if you need a pension, like I did, then with planned giving, you’re helping the agency and you don’t need to depend on relatives in your last years for support.”

Photography by Vanessa Helders. Courtesy American Cancer Society and Pace Communications, Inc.

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