What's Happening?
Charitable gift annuities (CGAs) are gaining renewed interest as a financial tool that combines philanthropy with personal financial planning. In 2025, CGA payout rates are at multi-decade highs, ranging from 6.3% to 9.1% for donors in their 70s and 80s.
This comes at a time when federal interest rates are beginning to taper, creating a favorable environment for donors seeking stable, guaranteed income. CGAs allow donors to make a one-time gift to a charity in exchange for fixed lifetime payments, with a portion of the gift being tax-deductible and some annuity income potentially tax-free for several years. This financial product is particularly appealing during periods of market volatility, offering a stable income stream and aligning with donors' values and long-term financial goals.
Why It's Important?
The resurgence of interest in CGAs highlights a shift in donor behavior towards more strategic and value-driven financial planning. As tax laws evolve and retirement rules change, donors are increasingly seeking transparent and simple giving strategies that provide both financial security and philanthropic impact. CGAs offer a unique solution by allowing donors to support charitable causes while securing a reliable income stream, thus bridging the gap between charitable intent and action. This trend reflects a broader movement towards integrating financial planning with personal values, providing financial professionals with opportunities to guide clients in making meaningful and intentional financial decisions.
What's Next?
As the economic landscape continues to evolve, financial advisors are likely to see increased interest in CGAs as part of comprehensive financial planning strategies. Advisors will need to effectively communicate the benefits of CGAs, addressing potential concerns about control and decision-making. By aligning CGA offerings with clients' life events and financial goals, advisors can facilitate impactful conversations that lead to long-term financial and philanthropic benefits. The ongoing adjustment to tax laws and retirement planning will further influence the adoption of CGAs, making them a relevant tool for those seeking predictability and tax efficiency in their financial plans.
