What is a Charitable Gift Annuity?
A charitable gift annuity (CGA) is an agreement where a donor makes a gift of liquid assets such as cash or stock and a charity agrees to make fixed payments to the donor for life (or a specified number of years). After the donor(s) passes away, the remainder of the annuity is left for the benefit of a specific charitable organization.
This vehicle has many tax benefits. You can take a tax-deduction when the gift is made, which may also save you capital gains tax depending on the type of asset donated. In addition, a large portion of the annual income you receive may not be taxed for a period of years. CCF staff can help you calculate these numbers.
Who should consider a Charitable Gift Annuity?
The minimum age for receiving payment from a CGA is 65, although deferred CGAs may be established for donors who are at least 49. This tool is ideal for older donors who:
- want to help a nonprofit organization
- have some savings in assets that can be easily liquidated, such as stocks, savings accounts, CDs, money market accounts
- want the income
It is also a tax-efficient tool for middle-aged donors who want to provide income for their parents or older relatives.
What are the benefits of a Charitable Gift Annuity?
Receive a steady reliable income during your life, and benefit your favorite nonprofit(s) thereafter
Take a tax-deduction when the gift is made, which may also save you capital gains tax depending on the type of asset donated
A large portion of the annual income you receive may not be taxed