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Charitable Gift Annuities

A charitable gift annuity (CGA) is a simple arrangement which provides financial benefits to individuals (donors) and charitable organizations.
General Overview
A simple contract specifies the value of the cash and assets contributed by the donor, and the terms of the guaranteed lifetime income paid to one or two individuals, usually the donor and a spouse. The income paid to the individual(s) are in the form of a guaranteed fixed payment (a lifetime annuity). The donor also receives a charitable deduction that may reduce their income taxes. After the individual(s) pass away, the assets are available to support the mission of the charity. Generally the annuity rate paid to the individuals is based upon the guideline rates suggested by the American Council on Gift Annuities. Sometimes the donor accepts a rate that is lower than the guideline, providing the donor with a larger charitable deduction and the expectation of producing a larger future benefit for the charity.
Charitable Gift Annuity
1 Life
Age Rate
60 4.4%
65 4.7%
70 5.1%
75 5.8%
80 6.8%
85 7.8%
90+ 9.0%
Charitable Gift Annuity
2 Lives (same age)
Age Rate
60 3.9%
65 4.2%
70 4.6%
75 5.0%
80 5.7%
85 6.7%
90 8.2%
95+ 8.8%
In today's low interest rate environment, a CGA may allow a donor to substantially increase their current income and reduce their income taxes. For example, recently a 65 year old couple had a $25,000 CD maturing at a bank. If they let the CD rollover, they will receive a guaranteed rate of 2% for two years. Instead, the couple established a CGA which guarantees them 5.1% for their combined lifetime. In addition, the couple received a charitable deduction of 19.44% of the value of assets contributed.
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