What Is a Charitable Gift Annuity

What Is a Charitable Gift Annuity, and How Does It Relate to GFA?

What is a charitable gift annuity
How does a charitable gift annuity work
How to give charitable donations as gifts
Are charitable gift annuities a good idea

Generous people have so many options for charitable donations, it can be overwhelming: cash, time, advocating for the charity on social media, sponsorships and much more. One option that is often forgotten is a charitable gift annuity. But what is a charitable gift annuity?

Simply put, a charitable gift annuity is exactly what it sounds like; it is part gift and part annuity, funded by a contribution of money or stock shares.[1] This type of contract provides donors with a fixed income stream for life in exchange for their donation to charity.[2]

This simple definition still leaves the question, “How does a charitable gift annuity work?” The following steps offer a basic outline of how the contract plays out:

  1. A donor signs an annuity contract with a charity, makes a lump sum donation and takes a partial tax deduction.
  2. The charity invests the donation.
  3. The donor then receives steady payments on a fixed schedule for life, according to the terms of the annuity agreement.
  4. Upon the donor’s death, the charity receives the remaining balance of the invested funds.[3]

The organizations that offer charitable gift annuities establish minimum ages as well as minimum amounts acceptable to set up the contract.[4] The donor’s age and the initial donation amount also determine the amount received in each payout. Older donors get more money for each annuity as their lifetime agreement will be shorter than a younger person’s.[5]

For donors who want to know how to give charitable donations as gifts, it is merely a matter of designating another person as the recipient of the annuity payments rather than the donor themselves.[6] This is a simple addition to the annuity agreement, and then the designee will receive the payments for the remainder of the donor’s life.

Answering “What is a charitable gift annuity” is only half of the equation. Donors want to know what impact their contributions will have on GFA World and other charities. GFA is blessed by many donors; donors are what make it possible for our ministry to continue working in Asia and now in Africa as well. Every little bit helps accomplish our vision “to meet tangible needs of precious people and show God’s love to those who need it most.”[7]

This vision takes on many forms in practice. One is through the raising up of national missionaires. GFA selects, trains and supports national missionaries, who work largely in areas where no one else has ever shared the Gospel. They have started thousands of new fellowships within people groups that have not yet been reached. These missionaries are uniquely qualified to do this work; they know the culture, language, beliefs and mindsets of the people. They are not seen as outsiders, so they have more access to restricted areas and are more readily accepted into communities. They know what the people need and can coordinate with community leaders for helping to meet the needs of that particular community, all done in the name of Christ.[8]

Our Child Sponsorship Program is another foundational element of meeting our vision. Kids living in the poorest of the poor conditions are enrolled in the program and receive vital assistance according ot the needs of the community, Such as clean water, tutoring assistance, medical care and nutritious food. This attention and care make it possible for children to escape poverty, finally breaking the vicious cycle may have enslaved their family for generations. The sponsorship of these children by donors is vital and is helping kids in many countries in Asia and more recently, Africa.[9]

Another ministry GFA uses to complete our vision is disaster relief efforts. A flood, a cyclone or an earthquake can drastically change lives, instantly wiping out homes and livelihoods. Our missionaires and churches are positioned perfectly to step in immediately to help the victims of natural disasters, providing emergency relief like food, clothes, clean water and shelter. They also counsel and comfort those who have lost loved ones in the disaster. GFA continues to work toward long-term solutions by helping rebuild homes, see children return to school and providing income-generating gifts to help families get back on their feet.[10]

These are just some of GFA’s ministries that rely on your partnership through your donations and prayer. Charitable gift annuities are a great way to contribute to this minisry. But the question remains: are charitable gift annuities a good idea? The answer depends on the person and the situation. There are some monetary benefits. Donors get a consistent, partially tax-free income stream for the rest of their lives and an immediate tax deduction.[11] Also, the amount used to fund a charitable gift donation is no longer part of the taxable estate, which can help donors reduce or avoid estate taxes.[12] However, there are a few drawbacks as charitable gift annuities benefit older donors the most, and the decision to fund this contract is permanent. The income received is also partly taxable.[13]

Of course, this is not an exhaustive answer to the question, “What is a charitable gift annuity?” Consider speaking to an advisor or getting further information from our organization on the topic[14] and think about partnering with GFA through an investment like this with both financial and eternal returns.

Request more information from GFA about gift annuities.

Learn more about what is the great commission

[1] “Planned Giving: The Charitable Gift Annuity.” GFA World. Accessed July 5, 2023. https://www.gfa.org/estate/cga/.
[2] “What Is a Charitable Gift Annuity?” Fidelity Charitable. Access July 5, 2023. https://www.fidelitycharitable.org/guidance/philanthropy/charitable-gift-annuity.html.
[3] Ibid.
[4] “Recommended Charitable Gift Annuity Best Practices.” American Council on Gift Annuities. Accessed July 5, 2023. https://www.acga-web.org/index.php?option=com_content&view=article&id=145:recommended-charitable-gift-annuity-best-practices&catid=29:best-practices&Itemid=126.
[5] “The Pros and Cons of Charitable Gift Annuities.” Lineweaver Financial Group. Accessed July 5, 2023. https://www.lineweaver.net/the-pros-and-cons-of-charitable-gift-annuities.
[6] “Planned Giving: The Charitable Gift Annuity.” GFA World. Accessed July 5, 2023. https://www.gfa.org/estate/cga/.
[7] “Our Ministries.” GFA World. Accessed July 5, 2023. https://www.gfa.org/ministries/.
[8] “National Missionaries.” GFA World. Accessed July 5, 2023. https://www.gfa.org/sponsor/.
[9] “Sponsor a Child with GFA World.” GFA World. Accessed July 5, 2023. https://www.gfa.org/sponsorachild/.
[10] “Disaster Relief Work.” GFA World. Accessed July 5, 2023. https://www.gfa.org/compassion-services/disaster-flood-relief/.
[11] “The Pros and Cons of Charitable Gift Annuities.” Lineweaver Financial Group. Accessed July 5, 2023. https://www.lineweaver.net/the-pros-and-cons-of-charitable-gift-annuities.
[12] “Planned Giving: The Charitable Gift Annuity.” GFA World. Accessed July 5, 2023. https://www.gfa.org/estate/cga/.
[13] “The Pros and Cons of Charitable Gift Annuities.” Lineweaver Financial Group. Accessed July 5, 2023. https://www.lineweaver.net/the-pros-and-cons-of-charitable-gift-annuities.
[14] “Non-cash Giving: Gospel for Asia Charitable Gift Annuity.” GFA World. Accessed July 3, 2023. https://www.gfa.org/plannedgiving/cga_contact/.