What Is A Charitable Gift Annuity?

A charitable gift annuity allows you to donate money to a non-profit, such as your alma mater. Planned giving can include charitable gift annuities. You can give back and get tax benefits. Meanwhile, you’ll receive an additional stream of income for the rest of your life. Here’s how to set it up and benefit from it.

What is a Charitable Gift Annuity?

A charitable gift annuity lets a donor make a donation and receive fixed annuity payments for the rest of their life. Either an individual or a couple can donate. The charitable gift annuity serves as a contract between the donor and the charity Custom Gift.

The donor makes a large gift to a charity, usually cash or securities. However, some donate real estate or other large financial assets. As a result, the donor can take a partial tax deduction for their donation. Meanwhile, the charity gives them a fixed stream of income for the rest of their life.

Charitable gift annuity donors are usually older, retired, and looking for an additional income stream in retirement – with the added bonus of getting to donate to charity.

How it Works

Many large nonprofit organizations offer gift annuities, especially colleges and universities. Your first step will be confirming that the group you want to donate to offers charitable gift annuities.

Assuming they do, your next step is to make the sizable donation you have planned. The minimum amount you can give to qualify for a charitable gift annuity is usually $5,000 or $10,000. However, many charitable gifts are usually worth much more than that.

The charity then sets your gift aside in a reserve account and invests it or puts it in an account that accrues interest. You receive a scheduled, fixed monthly or quarterly payout, usually supported by your original donation, for the rest of your life. After you die, the charity then gets to keep the rest of the gift.

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