A charitable gift annuity is a way to make a gift to Commonweal, and still receive an income for yourself or others. It is a contract under which a charity, in return for a transfer of cash or other property, agrees to pay a fixed sum of money for a period measured by one or two lives. The person who contributes an asset for the annuity is called the “donor,” and the person who receives payments is called the “annuitant” or “beneficiary.” Usually, the annuitant is also the donor, but this is not always true. The maximum number of annuitants is two, and payments can be made to them jointly or successively.
Payments from a charitable gift annuity are fixed from the outset. They will neither increase nor decrease, regardless of interest rates or the stock market. A charity is contractually obligated to make the payments, even if it has to dip into its general funds to do so. This may lower your estate taxes.
The size of the payments from a charitable gift annuity depends on the following factors:
- The gift annuity rate offered by the charity (most charities follow rates recommended by the American Council on Gift Annuities)
- The value of the contribution
- The number of annuitants
- The age(s) of the annuitant(s).