One of the simplest and most popular charitable gifts is a charitable gift annuity. This gift option is a combination of an investment and a gift and provides life income to the donor (and another recipient if desired - the annuitants). The designated charity accepts the gift and in return obligates itself to pay a fixed and specified dollar amount to the annuitant(s) for life.

A charitable gift annuity immediately becomes the property of the charity and is an irrevocable gift. The charity is legally bound to fulfill its commitment to pay the annuitant(s) for life. Some states have regulations regarding the issuance of charitable gift annuities. Please contact us regarding any questions.

There are two types of charitable gift annuities - immediate and deferred. An immediate annuity begins paying income immediately after the annuity agreement is signed. A deferred charitable gift annuity begins the income payments at a specified date in the future. A deferred charitable gift annuity will generally provide a larger charitable deduction than the immediate annuity and, as the funds will have an opportunity to grow without income distributions for a period of years, the income rate will generally be larger.

Gift Annuity Benefits

As a portion of the annuity is a gift, you'll receive an income tax deduction for the gift if you itemize.

• A portion of the annual annuity income is exempt from Federal taxes.
• You may save tax on the capital gain (profit from an investment).
• You avoid estate taxes, probate, and costs on the amount involved.
• The charity will have the use of the funds after the beneficiary's lifetime.
• The payments are fixed and will not fluctuate with interest rates.
  
• Your annuity is as safe as the organization you invest with, for the total assets of the organization stand behind their agreement to make payments to you.
• Generally the funds used to set up a charitable gift annuity may be structured as an unrestricted gift or to fund a particular item or program that is important to you (with the consent of the charity).

Return to Scenario Two or to the glossary.