A Charitable Gift Annuity Agreement is an arrangement whereby an individual or individuals make an irrevocable gift to a charitable organization in return for which they receive a guaranteed, regular annual income for life. In the case of a self-insured annuity, the balance remaining from the original principal of the annuity is used to support the work of the charity following the death of the annuitant, or in the case of a joint agreement, the death of the surviving annuitant.
Reinsured charitable gift annuities also are available whereby a charity purchases a gift plus annuity on behalf of the donor through a life insurance company. The charitable gift portion of the annuity can be used immediately to support the work of the charity.
The charitable gift annuity is quite different from commercial annuities issued by insurance and trust companies. The latter is a form of investment, not a gift to a charity whereby the charity becomes the beneficiary of the annuity. In order to qualify as a charitable gift annuity, a minimum of 20% of the principal amount of the annuity must be a charitable gift.
Charitable gift annuities are both a creative and successful fundraising method. As the use of charitable gift annuities expanded the CCAA became an important and necessary voice for charities that offer these financial products to their donors.
In order to expand benefits to members, the CCAA was constituted to have charities, not individuals, as members. It continues to monitor government and regulatory changes and to further self regulation of the complex business of charitable gift annuities and other life income gifts.
As planned giving expands in Canada, the CCAA provides vital support and leadership to charities wishing to include charitable gift annuities and other life income gifts in their planned giving programs.