Click here for historic suggested maximum rate schedules going back to March 1, 1997.  If you are interested in information on rates prior to March 1, 1997, please contact us.

How often are these rates changed?

The ACGA’s Rates & Regulations Committee meets regularly, typically monthly, to assess the economy and markets. It monitors data released weekly from the Board of Governors of the Federal Reserve System, and it assesses this data within the framework of ACGA’s longstanding, rules-based rate model.

Rate changes will be made as economic and market conditions warrant, and can take place more than once per year. That said, the rate model has historically tended to suggest a rate change no more frequently than once every one or two years. This stability in the published schedules provides a level of comfort to both annuitants and issuing charities that the CGA community has come to expect and rely on from ACGA.  If the committee determines that changes are advisable, these changes are proposed to the entire ACGA Board for its approval. 

How are the suggested maximum gift annuity rates calculated?

The Rates  & Regulations Committee develops its schedule of suggested maximum rates by first targeting a residual gift to the charity equal to 50% of the original gift amount. The Committee and its actuaries then use a set of assumptions for annuitant mortality, expenses, and investment returns to identify for each age a tentative rate which will produce the targeted nominal residual gift. It then determines whether the present value of the residual gift to charity, using the tentative gift annuity contract rate, is at least 20% of the funds transferred to the charity under the contract. If the tentative rate produces a present value in excess of 20%, the tentative rate becomes the final published rate for that age. If the tentative rate produces a present value of less than 20%, the rate is lowered until the 20% threshold is reached. Finally, the Committee determines whether any of the rates will produce a charitable deduction that is less than 10% of the funding amount for a chosen Charitable Midterm Federal Rate (CMFR). If so, those rates are reduced so that they produce a charitable deduction slightly greater than 10%.

A similar process is used to suggest rates for two-life gift annuities. More information about the mortality, expense, and investment return assumptions may be found in the latest version of the ACGA Rates Paper.

What is the relationship between floating monthly IRS rate (i.e., the Charitable Federal Mid-Term Rate or CFMR) and gift annuity rates?

The Charitable Federal Mid-Term Rate (CFMR) is used to calculate allowed federal income tax charitable deductions for gift annuities and other planned gifts. When developing a new schedule of suggested maximum gift annuity rates, the ACGA assures that its new rates will produce the required minimum charitable deduction of 10% of the funding amount at every annuitant age down to the CMFR prevailing at the time. The CFMR and gift annuity rates tend to vary with one another over time. For example, if the CFMR were to decrease dramatically over the course of a year, it is likely that the ACGA’s suggested rates would also decrease.

We encourage gift planners always to verify that new gift annuities will produce the required minimum charitable deduction of 10% of the value of the funds transferred. The ACGA’s suggested rate schedules typically result in deductions that pass this test; however, in declining interest rate environments (which results in declining CFMRs), it is possible that the ACGA’s suggested maximum annuity rate might need to be lowered to meet the 10% minimum requirement. This is particularly true for contracts that make payments to younger annuitants.