Charitable Gift Annuity

What Does Charitable Gift Annuity Mean?

A charitable gift annuity is an annuity in which the annuitant donates a portion of the funds to a charity. In return for this contribution, they receive tax benefits and access to annuity payments, often for the remainder of their life. Payment amounts depend on the donor’s age at the time of the gift and the size of the contribution, much like how annuities work in general.

Annuities, including charitable gift annuities, are commonly offered by life insurance companies.

Insuranceopedia Explains Charitable Gift Annuity

Charitable gift annuities provide three key benefits: supporting charitable causes, receiving tax breaks, and generating a fixed income. The deduction only covers the portion treated as a gift, and part of each annuity payment is taxable as income, which differs from how life insurance death benefits are taxed. However, for these benefits to be significant, the charitable donation must also be substantial.

These types of annuities can serve as valuable income streams for charities.