When you’re planning a donation to your favorite cause, see if the organization offers a charitable gift annuity (CGA). With such an arrangement, you will:
- Receive an upfront tax deduction;
- Lock in guaranteed lifetime income for yourself and perhaps your spouse;
- Remove assets from your taxable estate with no gift tax consequences;
- Benefit a valued charity; and
- Enjoy the recognition that comes with your donation.
With a CGA you make a gift to a charity or nonprofit organization while the recipient promises a stream of cash flow.
The payments may continue over your lifetime, no matter how long you live. Alternatively, the cash may keep flowing while either you or spouse is alive.
Payments are fixed; the older you are when you enter into the contract, the higher your fixed payment will be. For example, if your nearest birthday is 65, when you agree to a CGA, you might receive $1,500 per year on a $25,000 CGA. If you wait until age 80, when your life expectancy is shorter, you might receive $2,000 per year on your $25,000 CGA.
