A charitable gift annuity is an irrevocable charitable gift that provides fixed payments for life and ultimately supports ministry.
A donor may know that some of what God has entrusted to them will eventually go to ministry and still hesitate to give it today. The reason is often practical: I want to be generous, but I also need income for the years ahead. How can I do both?
Retirement is often a natural time for that question to pop up. Regular employment income changes, future needs become harder to predict, and resources accumulated over decades begin to serve a different purpose.
A charitable gift annuity brings those concerns into the same stewardship conversation.
So, what is a charitable gift annuity? A charitable gift annuity, often called a CGA, is an agreement between a donor and a charitable organization. You make an irrevocable charitable gift, and the charity agrees to make fixed payments to you and/or another person for life. When those lifetime payments end, the remaining amount supports the charitable purpose connected to the gift.
Once the mechanics are clear, the conversation can turn to what you want the resources God has entrusted to you to accomplish.
Table of Contents
How does a charitable gift annuity work? What the process looks like at Cru Foundation.
A charitable gift annuity begins with a gift.
At Cru Foundation, the basic process looks like this:
- You make an irrevocable charitable gift. Cru Foundation accepts eligible assets, including cash, stock, or a qualified charitable distribution from your IRA, according to its gift acceptance policies.
- A payout rate is established. The payout depends on factors such as the age of the person or people receiving payments and when those payments begin.
- You receive fixed payments for life. The payment amount is established when the CGA is created and does not rise or fall with market performance.
- The remaining amount supports ministry. When the lifetime payment obligation ends, what remains goes to the Cru ministries or missionaries designated through the arrangement.
This gives the resources two purposes across two seasons. During your lifetime, the CGA provides fixed payments according to the agreement. After the payment obligation ends, what remains continues toward the ministry purpose you chose. For a conversational walk-through, listen to Eric Fleshood and Katie Brubaker explain how a charitable gift annuity works on the Smarter Generosity Podcast.
The gift comes first
The word annuity can sound like language from the financial marketplace, so it helps to begin with a clear definition.
A charitable gift annuity is a charitable gift arrangement.
You make an irrevocable gift to a charitable organization, and the organization takes on a contractual obligation to make the agreed-upon fixed payments for life.
The conversation therefore begins with charitable intent: Do I already want to give these resources, and would fixed payments for life help me make that gift responsibly?
That charitable purpose stays at the center of the arrangement.
Who considers a charitable gift annuity?
Charitable gift annuities often enter the conversation as people enter into, or have already reached, retirement.
For decades, income may have come primarily from work. Then the pattern changes. Retirement income, savings, investments, and other resources take on greater importance, and generosity has to be considered alongside responsibilities at home.
As income changes, the stewardship questions change with it.
Someone may have supported missionaries or ministries for thirty years and want that generosity to continue. They may also have an income-producing asset they intend to give eventually, but still need that income during their lifetime.
A charitable gift annuity offers a way to make the charitable gift now and receive fixed payments for life.
Providing responsibly for yourself and the people who depend on you is part of stewardship. So is asking how generosity will continue through a new season of life. A CGA brings those responsibilities into the same conversation before the Lord.
What are charitable gift annuity rates?
When people search for charitable gift annuity rates, they are usually asking about the payout rate used to calculate the fixed payments. (By the way, you can look up the current American Council on Gift Annuities Rates here: https://www.acga.org/current-gift-annuity-rates. These are the rates that most charities in the US follow.)
The payout rate is established when the charitable gift annuity is created. Factors include the age of the person or people receiving payments, whether the agreement covers one life or two, and whether payments begin immediately or at a future date.
Because a CGA is a charitable gift arrangement, payout rate is the appropriate term for describing its fixed payments. Investment terms such as interest rate, rate of return, or yield do not apply.
Every arrangement depends on the people and timing involved. A personalized CGA illustration shows how a proposed gift would work in a donor’s particular circumstances.
The illustration can show the proposed payout, when payments would begin, and information about the potential charitable deduction associated with the gift. That gives you something concrete to review with your professional advisors before deciding whether the arrangement fits.
Can charitable gift annuity payments begin later?
Yes. A CGA can also be structured so that fixed payments begin at a future date.
This is known as a deferred charitable gift annuity.
Consider someone who expects to retire several years from now. They may already know that they want to make a charitable gift while having little need for additional payments during their remaining working years. A deferred CGA allows the gift to be established now, with fixed payments beginning later.
The timing of those payments is one of the factors used to establish the payout rate.
This brings the conversation back to the donor’s life. When will additional payments be useful? What responsibilities need to be provided for? What resources are already available? What ministry work does the donor hope these resources will eventually support?
Those answers help determine whether a CGA fits and when payments should begin.
Are there tax benefits to a charitable gift annuity?
A charitable gift annuity has tax considerations because part of the transfer is a charitable gift.
Depending on the donor’s individual circumstances and applicable law, part of the amount contributed may qualify for a charitable income tax deduction. Payments received from the CGA can also have different tax characteristics based on how the gift was funded and the details of the arrangement.
These calculations are best considered through a personalized illustration. Cru Foundation can prepare the illustration and explain the charitable arrangement, while the donor’s professional tax and financial advisors can evaluate how those details apply to the donor’s broader situation.
Tax savings are worth understanding because wise planning can preserve more resources for generosity. The gift itself begins with the donor’s desire to use what God has entrusted to them for ministry.
What happens when the lifetime payments end?
When the lifetime payment obligation ends, the remaining amount becomes available for the charitable purpose identified through the gift.
With a Cru Foundation CGA, donors can designate Cru ministries or missionaries they want those resources to support. Many of our donors choose to support multiple Cru missionaries or ministry projects with their CGA designations.
That gives the gift a longer story. The same resources that provide fixed payments during one season can later help a missionary stay on the field, support evangelism and discipleship, or strengthen ministry that helps people know Jesus.
For someone who has supported a particular missionary or ministry for many years, that connection can be deeply personal. The resources God provided during one lifetime can continue serving the Great Commission beyond the payment period.
Stewardship asks what the resources are for
Retirement changes plenty of financial calculations while leaving the foundational stewardship question in place: Who owns what we have?
David prays:
“For all things come from you, and of your own have we given you.”
(1 Chronicles 29:14, ESV)
Christian generosity begins from that conviction. God is the Owner. We receive resources from Him, care for them for a time, and make decisions about how they should be used.
Those stewardship decisions come before the financial tool.
How much will you need for retirement? What responsibilities do you have toward children, grandchildren, or others who depend on you? What resources have you already decided you want to give? Which ministries or missionaries has God placed on your heart?
As those answers become clearer, it becomes easier to evaluate whether a charitable gift annuity serves them.
The tool follows the purpose.
Retirement brings new stewardship questions
Years of earning and saving often give way to a season when the questions begin to change.
“How much can I accumulate?” may give way to, “What is all of this for now?”
Some resources will provide for daily life. Some need to remain available for future needs. Some will help fulfill responsibilities toward children or other family members. And some may be ready to move toward ministry.
Each family works through those decisions before the Lord in light of its own responsibilities and circumstances.
Cru Foundation begins with that larger stewardship picture. A charitable gift annuity becomes useful when it serves decisions a donor has already begun making about provision, generosity, and purpose.
For one person, greater flexibility may best serve those responsibilities. For another, making an irrevocable charitable gift while receiving fixed payments for life may fit exactly what they want those resources to accomplish.
The purpose of the conversation is faithful stewardship of what God has placed in your hands. A CGA is useful when it serves that purpose.
Frequently Asked Questions About Charitable Gift Annuities
What is a charitable gift annuity in simple terms?
A charitable gift annuity is an agreement in which a donor makes an irrevocable charitable gift and the charity agrees to make fixed payments to one or two people for life. When those payments end, the remaining amount supports the charitable purpose associated with the gift.
Is a charitable gift annuity an investment?
No. A charitable gift annuity is a charitable gift arrangement. The donor makes an irrevocable gift to the charitable organization, which agrees to make fixed payments for life according to the CGA agreement.
How are charitable gift annuity payout rates determined?
The payout rate depends on factors including the age of the person or people receiving payments, whether the agreement covers one or two lives, and when payments begin. A personalized illustration provides the payout information for a specific proposed gift.
Do charitable gift annuity payments change with the stock market?
No. The fixed payment amount is established when the charitable gift annuity is created and does not rise or fall with market performance.
Can a charitable gift annuity make payments to two people?
Yes. A charitable gift annuity may be structured for one or two people. For example, a married couple may establish an arrangement providing fixed payments according to the agreement for both lifetimes.
Can charitable gift annuity payments be deferred?
Yes. A deferred charitable gift annuity begins fixed payments at a future date. The planned starting date is one of the factors used to establish the payout rate.
Is a charitable gift annuity tax deductible?
Part of the amount used to establish a charitable gift annuity may qualify for a charitable income tax deduction, subject to the donor’s individual tax situation and applicable law. A personalized illustration and review with a professional advisor can clarify the potential tax treatment.
What happens when charitable gift annuity payments end?
With a Cru Foundation CGA, the remaining amount becomes available to support the Cru ministries or missionaries designated through the gift.
Is a charitable gift annuity right for everyone?
A CGA is designed for donors who already have charitable intent and are comfortable making an irrevocable gift. It may fit someone who wants to support ministry, values fixed payments for life, and finds that the arrangement fits their other responsibilities and stewardship priorities.
When you’re ready
If you are considering a charitable gift annuity, Cru Foundation can prepare a personalized illustration showing how the arrangement would work in your circumstances.
Our specialists will listen to what you are hoping to accomplish, explain the CGA in plain language, and provide information you can review with your professional advisors. Understanding the gift comes first, and there is no pressure to move forward.
Request a CGA illustration or start a conversation with Cru Foundation:
crufoundation.org/cga-form · 800-449-5454 · hello@crufoundation.org
This content is provided for educational purposes only and should not be considered legal or tax advice. Please consult your professional advisor regarding your specific situation. Cru Foundation does not write charitable gift annuities in Arkansas, Hawaii, Maryland, New Jersey, New York or Washington.
