With a charitable gift annuity, you make a gift to a charity and receive a stream of income that can go on for a lifetime. Some charities stipulate that you must contribute a minimum amount (say, $10,000) in order to receive a gift annuity.
The older you are when you make the donation, the greater the income you can receive. If you’re 60, for example, you might receive 5.7 percent, or $570 per year on a $10,000 gift. At 80 years old, that same $10,000 gift might entitle you to 8 percent, or $800 per year.
Similarly, a couple will get lower payments than a single recipient. An 80-year-old donor with a 75-year-old spouse, for example, might get 6 percent per year, if payments are to continue until they both die. In all of these situations, part of the income stream will be taxable while part will be a tax-free return of capital.
