By Beth Harper Briglia, CPA, CAP & IPA, Philanthropic Advisor and OLLI Instructor

UD's Gift Planning Team is proud to share charitable giving resources like this to help all our Blue Hens and friends make the most of their money. If you have and questions or want to discuss gift planning options, reach out at 302-831-3822 or giftplanning@udel.edu.

You may have heard the saying “you can have your cake and eat it too.” That is exactly what a Charitable Gift Annuity (CGA) can offer—a win-win solution for both you and the charitable organization you care about. Thanks to recent changes in tax laws and an interest rate environment that favors older donors, now may be an ideal time to explore this unique giving opportunity. A CGA allows you to support a cause while receiving reliable, fixed income payments for the rest of your life.

A CGA is a simple agreement between you and a charity. You make a charitable donation—typically in the form of cash or appreciated securities—and, in return, the charity agrees to pay you a fixed amount of income for life. You can choose to begin receiving payments immediately or defer them until a future date. When the agreement is made, you generally receive an immediate charitable income tax deduction for part of your gift. In most cases, a portion of your annuity income may also be tax-free for a number of years. After your lifetime, the remaining funds from your CGA go to the charity you designated. The payments you receive are backed by the full faith and obligation of the charity, which means the organization is legally responsible for ensuring that the CGA contract is fulfilled.

The amount you receive in annual payments depends on your age at the time the annuity begins. For example, based on rates currently recommended by the American Council on Gift Annuities, a 65-year-old might receive a rate of about 5.7 percent, while someone age 90 or older could receive up to 10.1 percent. These rates can vary slightly depending on the organization offering the annuity.

In 2023, the IRS expanded the rules around Qualified Charitable Distributions (QCDs) from IRAs, making it easier to use retirement funds to support charitable giving. Starting in 2025, individuals aged 70½ or older may use a one-time QCD of up to $54,000 from an IRA to fund a CGA. This contribution counts toward the annual QCD limit of $108,000. However, it is important to note that all annuity payments received from a QCD-funded CGA are fully taxable as ordinary income. This differs from a CGA funded with non-IRA assets, where a portion of the payments may be tax-free for a certain period.

There are additional benefits to consider when setting up a CGA. If you donate appreciated securities, you may be able to reduce or avoid capital gains tax. You also secure guaranteed income for life, which may be especially attractive when compared to the lower yields of many fixed-income investments. Most importantly, you make a lasting impact by supporting a cause that matters to you.

Of course, Charitable Gift Annuities are not one-size-fits-all solutions. You should consult your legal, tax, and financial advisors to determine whether a CGA is the right option for your financial and philanthropic goals. These professionals can help tailor the arrangement to best suit your personal circumstances.

If you are interested in supporting a meaningful charitable cause while enjoying a steady stream of income for life, a CGA may be a smart and rewarding choice. To learn more about how a CGA can benefit you and the University of Delaware’s Osher Lifelong Learning Institute (OLLI), please contact Nathana Jackson, Senior Director of Gift Planning, at 302-831-6093 or ndlane@udel.edu.