Types of Gift Annuities

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    • A charitable gift annuity is an agreement between a charity and a donor. The gift annuity contract states that the donor will give the annuity a specified amount of money. In return, the annuity will provide the donor with income though annuity payments. The donation becomes a tax deduction, and the income the donor receives is taxed as income over time.

    Single Life Annuity

    • A single life annuity is an immediate annuity that pays an income on one donor's life. When the donor initially gives the money to the charity, the charity buys an annuity with part of the donation to pay an income either for the remainder of the donor's life or for a specified period of time such as 10 or 20 years. When the donor dies, no funds are paid to a spouse.

    Joint Annuity

    • A joint annuity, sometimes referred to as a survivor annuity, is contingent on two lives. As with single life annuity, the donor gives the charity money and part of the donation goes to buy an annuity. In a joint annuity, the annuity payments are based on the life expectancy of the younger annuity owner. When one spouse dies, the other spouse continues to receive payments until the contract terms are fulfilled.

    Deferred Annuity

    • A deferred annuity doesn't start income payments immediately. This allows the annuity to accumulate assets tax-deferred. With gift annuities, the donor gives the charity a lump sum and the charity buys a deferred annuity with part of the money. The deferred annuity is designated to start producing income at a future date. This is an option chosen by individuals who want immediate tax relief and anticipate they will need income down the road.

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