A Charitable Gift Annuity is a contract between you and a charity that provides fixed and secure payments for life. You receive a charitable deduction at the time you fund the Charitable Gift Annuity, and the annual payment percentage is based on your age at the time the gift is made. The older you are, the higher the interest rate. In addition, a portion of each payment is tax-free. At death, the charity receives the balance of the annuity.
A Gift Annuity may be created for an individual or a married couple. Payments are then arranged for either the life of the individual or for the lives of both a husband and wife. The annuity rate for couples is somewhat lower than the rate for a single person.
A Deferred Gift Annuity (DGA) is frequently used by younger donors as a way to plan for retirement. With a DGA, the annuitant(s) start receiving payments at a future time, the date chosen by the donor, which must be MORE than one year after the date of the contribution.
Barnabas Foundation issues Charitable Gift Annuities for the support of its member organizations. An advantage of using Barnabas Foundation for your Charitable Gift Annuities is that distributions can support more than one charity.
Gift Annuity Benefits
- A fixed, secure income to you for your lifetime
- Immediate income tax deduction for the charitable value of the Gift Annuity
- A portion of the annual income payments you receive is tax-exempt, resulting in a higher effective rate of return
- Money in a Gift Annuity is not generally included in your estate for tax purposes
Gift Annuity Rates
Effective on January 1, 2012. Unchanged as of November 7, 2016.
Source: American Council on Gift Annuities
Remember that these are maximum rates. Donors can always request a lower rate, get a bigger charitable deduction and help their favorite charities even more.