What is a Charitable Gift Annuity (CGA)? You can think of a CGA as a loan between a donor and the Foundation. In this arrangement, the donor provides the principal (their gift), and in return, the Foundation offers interest payments to the donor for life. The unique twist is that the Foundation retains the principal upon the donor’s death for the benefit of the Foundation or another charity of the donor’s choosing. It’s a great way to donate to a beloved nonprofit while still maintaining income.
CGA’s are popular right now for a couple of reasons. Thanks to a provision in the SECURE 2.0 Act, individuals who are 70½ and older can make a once-in-a-lifetime distribution directly from their IRA to one or more CGA’s, which will be treated as a qualified charitable distribution (QCD), but will count against your annual QCD limit. For 2024, CGA and QCD limits are $53,000 and $105,000, respectively, and will be indexed to inflation going forward. This distribution is excluded from your taxable income, and it may be used to satisfy all or part of the IRS-mandated required minimum distributions (RMDs) that begin at age 73. Here are some sample rates:
Age 75 – 7.0% Age 77 – 7.4% Age 80 – 8.1% Age 85 – 9.1% Age 90+ – 10.1%
Interested in learning more? Email Monika Collins for further information.
