Charitable Gift Annuities
A Charitable Gift Annuity is a planned giving vehicle established by a contract
between a donor and a charity. Under the terms of the contract, the donor transfers
assets to the charity. In exchange, the donor receives a tax deduction and a lifetime
stream of income from the charity in the form of a fixed amount of money. When the
donor passes away, the charity keeps the gift.
The payments are fixed and unchanged for the term of the contract. The amount of
the income stream is determined by many factors including the donor's age and the
policy of the charity. The gift, which is irrevocable, becomes a part of the charity's
assets, and the payments are a general obligation of the charity.
The majority of states that regulate charitable gift annuities require the charity
to provide a published gift annuity rate chart of the maximum annuity rate the charity
offers each annuitant, listed by the annuitants' "actuarial age" (their age to the nearest
birthday) on the gift date.
While the charity may choose to spend a portion of the contribution immediately,
state law requires it to keep sufficient reserves to meet its annuity obligations
and satisfy regulatory requirements of all the states where it issues gift annuities.
States regulate the issuance of charitable gift annuities and the amount of reserves
a charity must keep on hand.
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