Key Term

What is Charitable Gift Annuity?

Definition

A charitable gift annuity is a contractual agreement between a donor and a charitable organization where the donor makes a significant gift of cash or assets to the charity in exchange for guaranteed fixed payments for life. The payments are based on the donor's age at the time of the gift, with a portion of each payment being tax-free. After the donor's lifetime, the remaining funds go to support the charitable organization's mission.

Significance

Charitable gift annuities are particularly significant in philanthropic planning as they offer a win-win solution for both donors and charities. For donors, they provide a reliable income stream, immediate tax benefits, and the satisfaction of supporting a charitable cause. For charitable organizations, they represent a valuable tool for securing long-term funding while building stronger relationships with donors. This giving vehicle is especially attractive to older donors who want to make a meaningful charitable impact while maintaining financial security in their retirement years.