Charitable Gift Annuities: A Donor’s Guide

charitable gift annuitiesCharitable gift annuities may be an alien word to many, but it simply evolves on the idea that gifts cannot be returned to its giver. Not only it is about the etiquette of gift-giving, but charitable gift annuities pay your beneficiaries for life. The American Council on Gift Annuities or ACGA defines a charitable gift annuity as a contract under which a charity, in return for a transfer of cash, marketable securities or other assets, agrees to pay a fixed amount of money to one or two individuals, for their lifetime. Usually the person who receives the payment is called an Annuitant or the beneficiary of your gift.

Since you are going to give a lifetime gift, charitable gift annuities are fixed and irrevocable. The amount is set, depending on the age of the annuitant. The charity will control the gift and will be responsible for paying income to your beneficiaries, as long as they live. For this reason, charitable gift annuities are regulated under state securities or insurance laws, and the institution must provide a published charity gift annuity rate chart. For this, charities may get in touch with the ACGA for suggested gift annuity rates. If the rates are higher than those of the ACGA, an actuary can justify it so long as it still complies with the state regulations.

Charitable Gift Annuity Agreements

Come in Three Versions, namely:

1. Single Life - charitable gift annuity paid to one person for a lifetime

2. Two Lives in Succession – charitable gift annuity paid to a second person in succession to the first beneficiary

3. Joint and Survivor - paid simultaneously to two persons, where the surviving beneficiary will be paid the full annuity amount if the other dies

There are many types of charitable gift annuities, though not all of them are allowed in all states:

Deferred Gift Annuity

This type of charitable gift annuity is where the beneficiary receives payments in the future, at the date the donor had chosen. This should be more than one year after the contribution date. Payments of this gift annuity can be made every month, every quarter, semi-annually, or yearly.

Flexible Annuity

The donor of this charitable gift annuity doesn’t need to choose a payment date. The annuitant can choose when the payment will start. Normally, the older the beneficiary is, the larger the gift amount will be. This type of annuity offers flexibility comparable to those of commercial annuities.

Immediate Gift Annuity

This type of charitable gift annuity provides immediate payment after the fist contribution has been made. Payments of this gift annuity can be made every month, every quarter, semi-annually, or yearly. The first payment is prorated, which is smaller than the next payments. The yearly rate is computed by multiplying the amount of contribution with the rate of annuity.

You must keep in mind that transfer of assets to your beneficiaries will be irrevocable and you can’t get back what you have given. The interest rate of your charitable gift annuities stay the same, regardless of inflation rates. If you’re planning to fund a charitable gift annuity, you can give at least $10,000. Since annuities are part of the charity’s capital assets, you must carefully consider the finances of your chosen charity, before you make that donation. Though, it’s rare that charitable institutions suffer liquidation. You may also consult your financial advisor to see the best charitable gift annuity that you are comfortable with. In the end, giving must come from the heart and whatever amount you can give, your annuitants will surely appreciate your goodwill.


American Council on Gift Annuities. “ What is a Gift Annuity. “ 2000-2009.

Fritz, Joanne. “ Charitable Gift Annuities. “ 2009.

Fritz, Joanne. “ What is a Charitable Gift Annuity? A Primer for Donors “ 2009.

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