Charitable Gift Annuities Are 0n The Rise
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    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,495,064 (-0.25%)       Melbourne $937,672 (-0.06%)       Brisbane $829,077 (+1.01%)       Adelaide $784,986 (+0.98%)       Perth $687,232 (+0.62%)       Hobart $742,247 (+0.62%)       Darwin $658,823 (-0.42%)       Canberra $913,571 (-1.30%)       National $951,937 (-0.08%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $713,690 (+0.15%)       Melbourne $474,891 (-0.09%)       Brisbane $455,596 (-0.07%)       Adelaide $373,446 (-0.09%)       Perth $378,534 (-0.83%)       Hobart $528,024 (-1.62%)       Darwin $340,851 (-0.88%)       Canberra $481,048 (+0.72%)       National $494,274 (-0.23%)   National $494,274                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 7,982 (-85)       Melbourne 11,651 (-298)       Brisbane 8,504 (-39)       Adelaide 2,544 (-39)       Perth 7,486 (-186)       Hobart 1,075 (-37)       Darwin 266 (+11)       Canberra 840 (-4)       National 40,348 (-677)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 7,376 (-100)       Melbourne 6,556 (-154)       Brisbane 1,783 (+12)       Adelaide 447 (+11)       Perth 2,139 (+3)       Hobart 173 (-1)       Darwin 393 (+1)       Canberra 540 (-29)       National 19,407 (-257)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $750 ($0)       Melbourne $550 ($0)       Brisbane $650 ($0)       Adelaide $550 ($0)       Perth $595 ($0)       Hobart $550 ($0)       Darwin $720 (+$40)       Canberra $675 ($0)       National $639 (+$6)                    UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $750 ($0)       Melbourne $550 ($0)       Brisbane $550 ($0)       Adelaide $430 ($0)       Perth $550 ($0)       Hobart $450 ($0)       Darwin $483 (-$38)       Canberra $550 ($0)       National $555 (-$4)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 5,759 (+74)       Melbourne 5,228 (-159)       Brisbane 2,940 (-7)       Adelaide 1,162 (-13)       Perth 1,879 (-7)       Hobart 468 (-15)       Darwin 81 (+6)       Canberra 707 (+10)       National 18,224 (-111)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 8,359 (+95)       Melbourne 5,185 (+60)       Brisbane 1,588 (-3)       Adelaide 335 (-30)       Perth 752 (+11)       Hobart 161 (-1)       Darwin 107 (-16)       Canberra 627 (-36)       National 17,114 (+80)   National 17,114                HOUSE ANNUAL GROSS YIELDS AND TREND       Sydney 2.61% (↑)      Melbourne 3.05% (↑)      Brisbane 4.08% (↑)        Adelaide 3.64% (↓)       Perth 4.50% (↓)     Hobart 3.85% (↑)        Darwin 5.68% (↓)     Canberra 3.84% (↑)      National 3.49% (↑)             UNIT ANNUAL GROSS YIELDS AND TREND       Sydney 5.46% (↑)      Melbourne 6.02% (↑)      Brisbane 6.28% (↑)        Adelaide 5.99% (↓)     Perth 7.56% (↑)        Hobart 4.43% (↓)       Darwin 7.36% (↓)     Canberra 5.95% (↑)        National 5.84% (↓)            HOUSE RENTAL VACANCY RATES AND TREND       Sydney 1.6% (↑)      Melbourne 1.8% (↑)      Brisbane 0.5% (↑)      Adelaide 0.5% (↑)      Perth 1.0% (↑)      Hobart 0.9% (↑)      Darwin 1.1% (↑)      Canberra 0.5% (↑)      National 1.2% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 2.3% (↑)      Melbourne 2.8% (↑)      Brisbane 1.2% (↑)      Adelaide 0.7% (↑)      Perth 1.3% (↑)      Hobart 1.4% (↑)      Darwin 1.3% (↑)      Canberra 1.3% (↑)      National 2.1% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND       Sydney 30.9 (↑)      Melbourne 32.6 (↑)      Brisbane 37.7 (↑)      Adelaide 28.7 (↑)      Perth 40.1 (↑)      Hobart 37.6 (↑)        Darwin 36.1 (↓)     Canberra 33.0 (↑)      National 34.6 (↑)             AVERAGE DAYS TO SELL UNITS AND TREND       Sydney 32.5 (↑)      Melbourne 31.7 (↑)      Brisbane 35.2 (↑)      Adelaide 30.2 (↑)        Perth 42.8 (↓)     Hobart 36.9 (↑)        Darwin 39.6 (↓)     Canberra 36.7 (↑)      National 35.7 (↑)            
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Charitable Gift Annuities Are 0n The Rise

By Karen Hube
Tue, Dec 15, 2020 4:57amGrey Clock 3 min

Move over, charitable trusts. Make way for the charitable gift annuity.

Typically viewed as entry-level gifting methods thanks to low minimum contribution amounts, low cost, and simplicity, charitable gift annuities have had a spike in inflows from wealthy donors lately. According to a BNY Mellon Wealth Management study, in 2019, assets in gift annuities were up 21% over the prior year, and the average gift was 56% larger. Assets continued to flow into charitable trusts, but at only a slightly higher level than in 2018.

The surge in popularity in gift annuities is likely a result of people’s desire for a guaranteed lifetime annuity at a time when yields are at historic lows in the fixed-income market, and a hesitation to sock money into a charitable remainder annuity trust (CRAT). 

A CRAT is the gift annuity’s equivalent in the trust world, and typically a popular tool. But ultralow interest rates and high valuations in the stock market make for a lousy environment for CRATs, says Crystal Thompkins, national director of gift planning services at BNY Mellon Wealth Management, who expects gift annuities’ popularity to extend through this year. 

As winds shift in the economy, the markets, and regulatory environment, it’s not uncommon for the popularity of different charitable planning tools to rise and fall. Given the surge in popularity of gift annuities, it’s worth a look at how they size up these days relative to their closest charitable trust cousin. 

Charitable Gift Annuities

A charitable gift annuity is a simple contract guaranteeing that if you give a nonprofit organisation a lump sum, it will pay you a fixed, lifetime annuity based on actuarial factors—a host of market factors combined with your life expectancy. Minimum donations are around $2,000 and, unlike a trust, no attorney is required to set one up (hence no attorney fees).

Even if you live beyond your life expectancy, after your lump-sum equivalent has been paid out, you continue to receive the annuity. Depending on the contract, the annuity can continue to pay out to a surviving spouse. If you and your spouse die before your lump sum has been paid out, the charity keeps the balance in its coffers.

Payments can be deferred, which increases the amount paid out in the future annuity. A partial donation for the gift can be taken upfront. Capital gains taxes on the growth of underlying assets are spread over the annuity payments. When interest rates are low, the future capital gains’ bite out of annuity payments is lower, leaving more intact as income, Thompkins says. 

Nonprofit groups that offer charitable annuities have large infrastructures, such as museums and universities. “We’re talking those with hundreds of millions in assets that are segregated to support their annuity programs,” Thompkins says. “These are diverse pools designed to absorb potential risk. It’s like managing a pension.”

The downside is that not all nonprofits offer gift annuities, and they aren’t customised, says Pam Lucina, chief fiduciary officer at Northern Trust. 

Charitable Remainder Trusts

In contrast, trusts can pay out to a number of different charities, over a specified period of time instead of a lifetime, and can be used to transfer assets to heirs. The CRAT is the most similar to a gift annuity: It turns a lump sum into an annuity, and what’s left at the end goes to charity—at least 10% of assets transferred to the trust is required to be left as a gift. 

But the CRAT has lost its luster lately, Thompkins says. The annuity and future gift are dependent on the high probability of the underlying invested assets performing within certain parameters. With stock market valuations high, and the economy in ragged shape due to Covid-19, there’s good reason for concern that the market could enter a sustained bear market.

“In 2008 and 2009, there were trusts that were exhausted with no benefit to either the charity or the donor,” Thompkins says. “Many people are leery now.”



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It Just Had an Energy Crisis, Now Europe Faces a Food Shock

Food prices continue to rise at a rapid pace, surprising central banks and pressuring debt-laden governments

By PAUL HANNON
Thu, May 25, 2023 4 min

LONDON—Fresh out of an energy crisis, Europeans are facing a food-price explosion that is changing diets and forcing consumers across the region to tighten their belts—literally.

This is happening even though inflation as a whole is falling thanks to lower energy prices, presenting a new policy challenge for governments that deployed billions in aid last year to keep businesses and households afloat through the worst energy crisis in decades.

New data on Wednesday showed inflation in the U.K. fell sharply in April as energy prices cooled, following a similar pattern around Europe and in the U.S. But food prices were 19.3% higher than a year earlier.

The continued surge in food prices has caught central bankers off guard and pressured governments that are still reeling from the cost of last year’s emergency support to come to the rescue. And it is pressuring household budgets that are also under strain from rising borrowing costs.

In France, households have cut their food purchases by more than 10% since the invasion of Ukraine, while their purchases of energy have fallen by 4.8%.

In Germany, sales of food fell 1.1% in March from the previous month, and were down 10.3% from a year earlier, the largest drop since records began in 1994. According to the Federal Information Centre for Agriculture, meat consumption was lower in 2022 than at any time since records began in 1989, although it said that might partly reflect a continuing shift toward more plant-based diets.

Food retailers’ profit margins have contracted because they can’t pass on the entire price increases from their suppliers to their customers. Markus Mosa, chief executive of the Edeka supermarket chain, told German media that the company had stopped ordering products from several large suppliers because of rocketing prices.

A survey by the U.K.’s statistics agency earlier this month found that almost three-fifths of the poorest 20% of households were cutting back on food purchases.

“This is an access problem,” said Ludovic Subran, chief economist at insurer Allianz, who previously worked at the United Nations World Food Program. “Total food production has not plummeted. This is an entitlement crisis.”

Food accounts for a much larger share of consumer spending than energy, so a smaller rise in prices has a greater impact on budgets. The U.K.’s Resolution Foundation estimates that by the summer, the cumulative rise in food bills since 2020 will have amounted to 28 billion pounds, equivalent to $34.76 billion, outstripping the rise in energy bills, estimated at £25 billion.

“The cost of living crisis isn’t ending, it is just entering a new phase,” Torsten Bell, the research group’s chief executive, wrote in a recent report.

Food isn’t the only driver of inflation. In the U.K., the core rate of inflation—which excludes food and energy—rose to 6.8% in April from 6.2% in March, its highest level since 1992. Core inflation was close to its record high in the eurozone during the same month.

Still, Bank of England Gov. Andrew Bailey told lawmakers Tuesday that food prices now constitute a “fourth shock” to inflation after the bottlenecks that jammed supply chains during the Covid-19 pandemic, the rise in energy prices that accompanied Russia’s invasion of Ukraine, and surprisingly tight labor markets.

Europe’s governments spent heavily on supporting households as energy prices soared. Now they have less room to borrow given the surge in debt since the pandemic struck in 2020.

Some governments—including those of Italy, Spain and Portugal—have cut sales taxes on food products to ease the burden on consumers. Others are leaning on food retailers to keep their prices in check. In March, the French government negotiated an agreement with leading retailers to refrain from price rises if it is possible to do so.

Retailers have also come under scrutiny in Ireland and a number of other European countries. In the U.K., lawmakers have launched an investigation into the entire food supply chain “from farm to fork.”

“Yesterday I had the food producers into Downing Street, and we’ve also been talking to the supermarkets, to the farmers, looking at every element of the supply chain and what we can do to pass on some of the reduction in costs that are coming through to consumers as fast as possible,” U.K. Treasury Chief Jeremy Hunt said during The Wall Street Journal’s CEO Council Summit in London.

The government’s Competition and Markets Authority last week said it would take a closer look at retailers.

“Given ongoing concerns about high prices, we are stepping up our work in the grocery sector to help ensure competition is working well,” said Sarah Cardell, who heads the CMA.

Some economists expect that added scrutiny to yield concrete results, assuming retailers won’t want to tarnish their image and will lean on their suppliers to keep prices down.

“With supermarkets now more heavily under the political spotlight, we think it more likely that price momentum in the food basket slows,” said Sanjay Raja, an economist at Deutsche Bank.

It isn’t entirely clear why food prices have risen so fast for so long. In world commodity markets, which set the prices received by farmers, food prices have been falling since April 2022. But raw commodity costs are just one part of the final price. Consumers are also paying for processing, packaging, transport and distribution, and the size of the gap between the farm and the dining table is unusually wide.

The BOE’s Bailey thinks one reason for the bank having misjudged food prices is that food producers entered into longer-term but relatively expensive contracts with fertilizer, energy and other suppliers around the time of Russia’s invasion of Ukraine in their eagerness to guarantee availability at a time of uncertainty.

But as the pressures being placed on retailers suggest, some policy makers suspect that an increase in profit margins may also have played a role. Speaking to lawmakers, Bailey was wary of placing any blame on food suppliers.

“It’s a story about rebuilding margins that were squeezed in the early part of last year,” he said.

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