Gift Annuity Programs: A lesson from my father, the accountant

My father did not take risks lightly. Born in Poland and raised in Israel, he was reluctant to leave his comfortable (if unglamorous) job with the Israeli electric company for something bigger—and riskier—in America. Nevertheless, at the urging of his parents and brother, he moved to the United States, served in WWII, and started a new life for himself in an unfamiliar place.

Always a numbers man, he earned his money steadily and honestly over a lifetime as an accountant. One morning, when I was in my early days working with Yad Sarah, we sat together at the kitchen table and he spoke to me from his usual chair. He said he'd heard of annuity programs through some nonprofits—something to make sure that he could support himself and my mother financially for years to come—and wanted to know if Yad Sarah could help. As an accountant, he saw tremendous value in these programs, which offered a way for seniors to have a guaranteed income for the rest of their lives, benefit from generous tax deductions, and support a great organization.

At the time, my answer was an unfortunate "no" as Friends of Yad Sarah did not have a gift annuity program. Now, more than a decade later, Yad Sarah manages a successful and fast growing annuity program, with competitive rates.

Just like my dad, most of the people who participate in our gift annuity program are not ultra-wealthy. They are normal, hardworking people, who have spent their lives building a nest egg and want to protect their money with guaranteed income in their later years. With lump-sum cash gifts as low as $10,000, Yad Sarah will pay donors a mostly tax-free annuity, guaranteed for life.

Annual payouts vary based on the donor's age and the dollar amount gifted. Yad Sarah's rates are drawn from approved life expectancy tables and pass through an IRS compliance test. Based upon these actuarial calculations, a $200,000 donation made at age 70, for example, will pay 6.5%, or $13,000 every year for the rest of the donor's life. The gift annuity program is regulated by the State of New York and reviewed annually to ensure that annuitants are protected. The State of New York requires a segregated annuity reserve funds to be used only to guarantee payments to annuitants.

My father was a charitable man, who lived comfortably and loved Israel, but he was not extraordinarily rich. Through Yad Sarah's annuity program, people like my dad are able to support life-changing philanthropic work and simultaneously make sure that their hard-earned money is working for them throughout the course of their life.