Charitable Gift Annuities Explained

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Image of charitable gifts.
Image of charitable gifts. (Image: mangostock/iStock/Getty Images)

Charitable gift annuities provide a way for someone with philanthropic intentions to give money to charities up front in exchange for a stream of guaranteed payments over the remainder of her life. In addition to helping worthy causes and getting paid for it, donors also receive a partial income tax deduction for the contribution.

Charitable Gift Annuity Function

When you make your gift to the charity, the charity agrees to pay you a percentage of the gift each year based on your age. The older you are, the higher the percentage payment can be, because you have a shorter remaining life expectancy. Or, if you're married and want the payments to continue for the life of your spouse if he outlives you, you can accept a smaller percentage to ensure the payments continue after the first of you dies.

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