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In this arrangement, you would deal directly with the charity. Cash or other assets are given to the charity in return for an income stream from the charity for your life or the joint lives of yourself and your spouse. Setting up the Charitable Gift annuity (CGA) is simple, convenient, and inexpensive because the charity will already have forms available, and no attorney is typically needed to implement the CGA. Also, most charities will set the annuity income stream by utilizing rates suggested by the American Council on Gift Annuities.
The amount of the income tax charitable deduction in this case will be the difference between the fair market value of the donated property and the discounted present value of the annuity. A portion of each annuity payment represents a return of principal and another portion represents ordinary income. If the property donated is appreciated property, a portion of the annuity payment will also be treated as a capital gain to the annuitant.
The commencement of the annuity can be deferred and that will also impact the amount of the charitable deduction, but it may satisfy a particular need that you may have for timing the income stream.