607 / What is a charitable gift annuity?

A charitable gift annuity agreement is a contractual obligation undertaken by a charity to pay an annuity to an individual in return for an amount transferred by the individual, where the actuarial value of the agreed upon payments is usually less than the amount contributed (notwithstanding the fact that the payments might exceed the amount transferred if the annuitant lives long enough). The contractual obligation is backed by the charity’s assets. The typical charitable gift annuity can involve the transfer of appreciated property.