Perhaps we’re about to see.

In the early to mid-1980s, interest rates were high and gift annuities were out of favor. Why out of favor? Because a fixed payment rate less than the prevailing safe interest rate is a sure money loser. Rising interest rates, even if not yet “high,” ratchet down the value of a fixed payment rate. So, as we enter 2017, if interest rates continue to push upward, we should expect to see headwind for gift annuity marketing efforts.

The wild card is what happens to asset values—the values of stocks and real estate, in particular. If interest rates rise because of rising economic activity, perhaps asset values will inflate. A widespread anticipation of growing asset values would logically portend well for charitable remainder unitrusts and charitable lead annuity trusts.

Rising asset values also would raise the value of residuary bequests. Residuary bequests have proven to be the real pot of gold for some charities.

The challenge for development officers charged with marketing planned gifts is to avoid being whipsawed by some sort of run-up in interest rates or asset values followed by a sharp reversal. The best approach to marketing planned gifts always has been to steer a steady course focused on mission.

If you want expert advice on how to market planned gifts in today’s changing economic situation, be in touch with your Sharpe Group representative.

by Jon Tidd