Gift Annuity

A gift annuity is a contract between a donor and the charity. In return for a donation or other assets, the charity agrees to pay the donor or a friend or family member the donor chooses a fixed payment for life. The donor can also claim a charitable tax deduction. Income for a gift annuity can be deferred for years. Gift annuities are attractive to donors who want to receive a fixed income from assets that have risen sharply in value, such as long term stocks. In return for gifts of such assets, the charity guarantees the donors a fixed annual income for the rest of their lives and helps the donor avoid capital-gains tax on the transfer of such assets. The donor also gets an income-tax break on a portion of the earnings from an annuity.