The concept of the charitable gift annuity in America dates back to 1843, when a merchant in Boston first donated a gift of money to the American Bible Society in exchange for a regular flow of income.

A Charitable Gift Annuity (CGA) is a simple contract between you and Children's Hope. In exchange for your irrevocable gift of cash, securities or other assets, Children's Hope agrees to pay a fixed income to you or someone you specify each year for life. Gift Annuity payments are based on rates recommended by the American Council on Gift Annuities. The payments are guaranteed by the general resources of Children's Hope, and backed up by a reserve account.  The minimum initial gift is $10,000.

Different types of CGAs

There are two basic types of CGAs and they each meet different needs:

Immediate Payment

With this type of gift annuity, your payments begin as soon as the contract takes effect. For example, if quarterly payments are elected, payments begin at the end of the quarter in which you make your gift. Recommended age is 65 or older.

Deferred Payment

This option allows younger donors to delay the start of payments until they have reached retirement age. Like an immediate payment gift annuity, you can take a charitable deduction in the year you make your gift. Because payments are deferred, however, you or your designated annuitants will receive substantially higher income payments later. This type of gift works best for income beneficiaries between the ages of 40 and 60.

What are the advantages?

· Guaranteed fixed income for life

· Rates of return up to 10% for one person (slightly less for two people)

· Charitable income tax deduction for a portion of your gift

· Tax-advantaged income (your payments will be partially tax-free under most circumstances)

· Reduced capital gains tax (you pay capital gains tax only on the gain attributed to your retained income interest)

· Potential reduction of estate tax liability

· The satisfaction of making a substantial gift to Children's Hope during your lifetime

Example

You donate $10,000 of appreciated stock, originally purchased for $2,500, to a Single-Life Gift Annuity with quarterly payments that begin immediately. Assume an IRS discount rate of 6.0%.