What to know about Charitable Gift Annuity Rates

Many Canadians save their money throughout their working lives so they can live comfortably in retirement and support causes they care most about. However, once they reach this point in life, some retirees may feel hesitant to make a charitable gift during their lifetime in fear that it could jeopardize their access to supplemental income, both now and in the future.

One option that many Canadians overlook is a Charitable Gift Annuity. In fact, according to an RBC survey, only about 35% of Canadian retirees are exploring or considering annuities as part of their retirement plans. One reason for such low national uptake is awareness and understanding.

In a nutshell, a Charitable Gift Annuity is a contract that provides the donor a fixed income stream for life in exchange for a substantial donation to a charity. Like a standard annuity, a charitable gift annuity is designed to help protect the individual from the risk of outliving their income during retirement.

Getting started with a Charitable Gift Annuity

Working with an insurance advisor, donors can purchase an annuity using available capital from their personal savings, such as appreciated securities or from registered accounts such as RRSP’s and RRIF’s.

In the case of registered accounts, holders are required by the CRA to convert their account into an income stream by the age of 71, making registered accounts ideal for purchasing an annuity. In either case, a donor can purchase an annuity that is best tailored to their financial needs, receive regular income at a fixed rate and support a charity of their choice.

Charitable Gift Annuity Rates

There are several factors that contribute to the amount of regular returns a donor receives from an annuity, these may include age, time of the agreement, the amount being contributed among other factors.

Once determined, the amount is fixed and will never fluctuate or adjust for inflation. Donors should remember that their rate of return is guaranteed and will continue for the rest of their lives regardless of how the investments of the annuity perform.

For donors who wish to make a gift to their favourite charity but hesitate when they think about future cash requirements, a Charitable Gift Annuity is an option to discuss with a financial advisor.

Charitable Gift Annuity - Benefits at-a-glance:

  • Provides a steady income stream
  • Enables a donor to make a charitable gift during their lifetime
  • Possible donation of various assets: cash, securities or personal property
  • Avoids jeopardizing donor access to supplemental income
  • Maximizes tax benefits

Read more about the Tax Advantages of Charitable Gift Annuities.