Charitable Gift Annuity

What Is a Charitable Gift Annuity?

A charitable gift annuity is a contract between a charity and a donor where, in exchange for an irrevocable transfer of assets to the charity, the donor receives:

  • An immediate income tax charitable deduction for a portion of the gifted assets
  • A fixed stream of income for the lifetime of up to two annuitants (the donor and/or beneficiaries designated by the donor)
  • A legacy gift donated to the charity upon the passing of the annuitants

 

A charitable gift annuity can be designed to begin paying an income stream to the donor immediately, at a fixed future date, or at a flexible future date, providing the donor with the opportunity to leverage “after tax” income.

Benefits of a Charitable Gift Annuity

Contributing assets to a charitable gift annuity qualifies the donor for an income tax charitable deduction of a portion of the original gift for the year the annuity is established. If the charitable gift annuity is funded with appreciated securities or real estate owned more than one year, and the donor is receiving the annuity payments, part of the annuity payments received by the donor will be taxed as ordinary income, part as capital gain, and part may be tax-free.
Charitable gift annuities are maintained by charitable organizations. The annuity payments made to annuitants are fixed, and do not fluctuate or become adjusted for inflation. These payments are guaranteed to continue for the lives of the annuitants, and as obligations of the charity, they are backed by the charity’s assets.
In establishing a charitable gift annuity, donors receive a dependable, fixed income in exchange for their gift to a charity and for supporting causes for which they are passionate. The assets contributed to the charity that issues the charitable gift annuity are immediately available for use by the charity in furthering their charitable mission. Upon the death of the last annuitant to die, the charity’s obligation to make annuity payments ceases.

Who Is a Candidate for a Charitable Gift Annuity?

A charitable gift annuity is ideal for donors who have appreciated assets which would generate a large capital gain liability to the donor if sold outright. This immediate capital gain recognition is avoided when donors contribute these assets to a charity via a charitable gift annuity. Donors seeking a steady income stream for themselves or their heirs, and an income tax charitable deduction for the year in which the charitable gift annuity is established, are also viable candidates.

Our questionnaire can help you decide if a charitable gift annuity is right for you. Click the button below to fill out the questionnaire, or keep reading for more helpful information.

Take the Find Your Fit Questionnaire

How Does a Charitable Gift Annuity Work?

If a charitable gift annuity is favorable for you, then Ren will help you get started by first contacting your preferred charity to see if they offer charitable gift annuities. If they do not, a charitable gift annuity may be possible through a community foundation, which could still benefit your charitable cause or organization. We’ll also estimate the amount of your expected annuity payment through a charitable gift annuity calculator. The American Council on Gift Annuities offers updates for the suggested current charitable gift annuity rates for both individuals and dual annuitants. Consult with your financial advisor to determine which charitable gift annuity rate best fits your situation.

Charitable Gift Annuity Resources

Donor Story

Steve & Becky Schmidt increase their future cash flow.

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Quick Guide

Reference Guide for charitable gift annuity.

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Gift Summary

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FAQs

Someone with appreciated assets who desires: avoiding realized capital gain on the outright sale of the assets; an immediate income tax charitable deduction for transferring assets via the charitable gift annuity; a fixed stream of income for life; and to benefit charity immediately and after the expiration of the charitable gift annuity.
The maximum number of annuitants is two.
A charitable gift annuity is a contract between the annuitant(s) and one charity that issues the annuity. The charity has sole and immediate use of the assets it receives from the donor in exchange for the charitable gift annuity. With a charitable remainder trust, a charity does not receive trust assets until the trust ends, which typically occurs at the death of the lifetime income beneficiaries. However, unlike charitable gift annuities, multiple charities may receive trust assets at the termination of the charitable remainder trust.
Cash or cash equivalents, appreciated securities and gifts of personal property are the most common, and best suited, assets.
The minimum gifts for establishing a charitable gift annuity will vary with the charity that issues the charitable gift annuity. There is no set minimum.

How to Get Started with a Charitable Gift Annuity

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