Gift Annuities

Also known as “charitable gift annuity or CGA”, a gift annuity enables one to transfer their cash or marketable securities to a charitable organization. In exchange the person gets current income tax deduction and fixed annual payments for the rest of the life. In other words, it is a contract in which, a charity contracts with one or two individuals, who are ready to transfer their cash, marketable securities or other assets, for which they get a fixed amount of money from that charity for their lifetime. Gift annuity excludes the instance of the "College (Tuition) Annuity".

A gift annuity offers immediate tax relief and has the potential to provide some tax-free retirement income as well. In exchange for the gift contributions made to a charity, the charitable institution guarantees a retirement income, either immediate or deferred which can last for the entire lifetimes of the donor and spouse. There exists different types of gift annuities among which charitable gift annuity is considered as one of the most crucial one.

A Charitable Gift Annuity is a gift vehicle that falls in the category of Planned Giving. Planned Giving is an area of fund raising that refers to several specific gift types that can be funded with cash or property. These gift vehicles are based on United States tax law. The specific rules of planned giving are defined by the United States Congress and the Internal Revenue Service.

The amount of the income stream is determined by many factors including the donor's age and the policy of the charity. Most charities use payout rates defined by the American Council on Gift Annuities. Now moving on to the other aspect, the charity keeps the gift after the donor passes away and this is from where the main benefit to the charity gets accrued.