1. What is a Charitable Gift Annuity?

A Charitable Gift Annuity is a financial arrangement where a donor makes a gift to a charity and in return receives fixed payments for life. The payment amount is determined by the principal amount and the annuity rate.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Principal \) — The initial gift amount in dollars
• \( Annuity\ Rate \) — The percentage rate determined by the charity based on the donor's age

Explanation: The annual payment is calculated by multiplying the principal amount by the annuity rate (expressed as a decimal).

3. Importance of Gift Annuity Calculation

Details: Calculating the expected payment helps donors understand the financial benefits of a charitable gift annuity and compare it with other giving options.

4. Using the Calculator

Tips: Enter the principal amount in dollars and the annuity rate as a percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How are annuity rates determined?
A: Rates are typically based on the donor's age and are set by the charity, often following guidelines from the American Council on Gift Annuities.

Q2: Are gift annuity payments guaranteed?
A: Payments are typically fixed and backed by the charity's assets, though they're not government-insured like bank accounts.

Q3: What tax benefits are associated with gift annuities?
A: Donors may receive a partial charitable deduction and part of each payment may be tax-free.

Q4: Can the principal be returned?
A: Generally no - the remaining principal goes to the charity after the donor's lifetime.

Q5: Are there minimum gift amounts?
A: Many charities set minimums, typically $5,000-$10,000, but this varies by organization.