Charitable Gift Annuities

One of the simplest and most popular charitable gifts is a charitable gift annuity. This gift option is a combination of an investment and a gift and provides life income to the donor (and another recipient if desired - the annuitants). The designated charity accepts the gift and in return obligates itself to pay a fixed and specified dollar amount to the annuitant(s) for life.

A charitable gift annuity immediately becomes the property of the charity and is an irrevocable gift. The nonprofit organization is legally bound to fulfill its commitment to pay the annuitant(s) for life. Some states have regulations regarding the issuance of charitable gift annuities. Please contact us regarding any questions.

There are two types of charitable gift annuities - immediate and deferred. An immediate annuity begins paying income immediately after the annuity agreement is signed. A deferred charitable gift annuity begins the income payments at a specified date in the future. A deferred charitable gift annuity will generally provide a larger charitable deduction than the immediate annuity and, as the funds will have an opportunity to grow without income distributions for a period of years, the income rate will generally be larger.

Charitable gift annuities are the gifts that keep on giving. Rates on charitable gift annuities are based on age and whether the contract is immediate or deferred. If you would like an illustration of this life income to address your particular situation, please click here and fill out the response form and send us the appropriate information.

Gift Annuity Benefits

As a portion of the annuity is a gift, you'll receive an income tax deduction for the gift if you itemize.

• A portion of the annual annuity income is exempt from Federal taxes.
• You may save tax on the capital gain (profit from an investment).
• You avoid estate taxes, probate, and costs on the amount involved.
• The charity will have the use of the funds after the beneficiary's lifetime.
• The payments are fixed and will not fluctuate with interest rates.
• Your annuity is as safe as the organization you invest with, for the total assets of the organization stand behind their agreement to make payments to you.
• Generally the funds used to set up a charitable gift annuity may be structured as an unrestricted gift or to fund a particular item or program that is important to you (with the consent of the charity).

A charitable gift annuity can be arranged to fit most financial and philanthropic needs. Here are some questions and concerns we sometimes hear:

Q: Is there some way I could use an annuity to help support my mother (she’s 77) and have the payments come to me after her death?
A: You can establish a twolife “survivorship” annuity that would provide a lifetime income to your mother and a charitable contribution deduction for you this year. When your mother dies, the payments would continue to you for the rest of your life.

Q: Can I arrange a gift annuity for a family friend? She is actually our part-time housekeeper and is getting ready to retire. I would like to do something for her and a worthwhile cause, as well.
A: Gift annuities can be an important supplement to anyone’s retirement income, including friends and family members. The friend will receive annual payments for life but you will receive the charitable deduction. It’s best to fund such annuities with cash, for tax purposes.

Q: My mother and father both died during the last three years and I would like to make a gift in their memory. Can a gift annuity be established as a memorial?
A: Your gift annuity can memorialize another person or persons and we would be pleased to help plan such a gift.

Q: I’m concerned about having to pay taxes on my Social Security benefits because my other retirement income is over the limit. Could a gift annuity help me, since the income is partly tax free?
A: Under the right circumstances, retirees can reduce the tax on Social Security benefits by converting some fully taxed investments into charitable gift annuities. You’re sure to save taxes, in any event.

We would be happy to provide you with more information on charitable gift annuities, and to send you our free booklet explaining this unique gift and income arrangement.

Individual financial circumstances vary. The information on this site does not constitute legal or tax advice. Because of the complexity of estate planning, it is important that your attorney structure your estate and draft your will or truts so as to best carry out your wishes. Minnesota Public Radio cannot act as executor of a donor's estate. Individual support guarantees that substance and values, not commercial considerations, govern our programming. Please include MPR in your will and provide a sound legacy to future generations.

We use reasonable efforts to include up-to-date and accurate information on this site, but make no representations, warranties or assurances as to the accuracy or completeness of the information provided. MPR is not liable for any damages related to your reliance on this Charitable Gift Planning site.