We’ve been hearing from many of you lately that charitable gift annuities (CGAs) are popping up more often in client conversations. If you’re seeing the same trend, you’re not alone—and there are a couple of timely reasons why CGAs might be on your clients’ radar right now.

A $54,000 opportunity

Word is finally getting out about the availability of a one-time Qualified Charitable Distribution transfer via a “split-interest gift” such as a CGA or a charitable remainder trust (CRT) under the “Legacy IRA” provisions enacted a couple of years ago. In 2025, that ceiling is $54,000, adjusted for inflation. Not a small number.

While both CGAs and CRTs qualify, many clients may find CGAs appealing because they’re simpler and less expensive to set up—especially for smaller gift amounts.

Payout Rates Are Still High

In 2024, rates jumped to their highest levels in years—and the good news is, they’re holding steady for 2025, thanks to recent adjustments by the American Council on Gift Annuities (ACGA).

With interest rate projections still unpredictable as we move toward 2026, some clients may see this year as a smart time to lock in favorable rates with a CGA.

The Basics: What to Know About CGAs

So what do you need to know about how and why a charitable gift annuity can be an effective planning tool for some clients?

• A charitable gift annuity allows your client to transfer assets to a nonprofit in exchange for a lifetime income stream and a partial tax deduction.
• When the client passes away, the remaining funds are retained by the charity. 
• The charitable deduction is based on IRS rules that calculate the gift’s value above the present value of the annuity payments (and these calculations benefit from today’s relatively high rates).
• Your client can fund a charitable gift annuity with a variety of assets, including marketable securities and cash. 
• Payouts are based on actuarial tables, meaning they’re carefully calculated based on your client’s age and life expectancy. Payments are made in equal installments, and a portion is treated as tax-free return of principal from the client’s original gift.
• Generally, a significant charitable benefit remains after the donor’s lifetime. 
• The charity’s own assets, not just the donated assets themselves, back the annuity payouts. Because of this dynamic, charitable gift annuities are regulated by most states to ensure that the charity has enough reserves to meet obligations.

To learn more about how CGAs work, the ACGA offers a helpful overview here, and this article provides a good primer on CGAs as planning tools.

If a client brings up CGAs—or you just want to explore whether one could be a good fit—give us a call. Our team at the Community Foundation of Anne Arundel County is here to make your job easier by helping you stay up to date on the evolving rules around philanthropy. Contact us at info@cfaac.org or 410.280.1102.