A Charitable Gift Annuity is a contract between you and a qualified charity, which exchanges a gift to charity for an annual return. Once you establish a gift annuity, your payment amount is fixed and guaranteed for life. You receive an immediate income tax deduction, and a portion of the annual payment you receive is tax-exempt. The money in your gift annuity is generally not included in your estate, thus also removing the burden of inheritance and estate taxes.
A gift annuity can be created for an individual or a married couple, and it may be funded with cash, stock, or other assets. Your income from a gift annuity depends upon your age; the older you are when you begin, the higher the return. You can also increase the amount of your annual income by choosing to defer payments. Effective July 1, 2010, the rates for annuities increased, making this an even more appealing investment.