A charitable gift annuity is a transaction by which a donor transfers cash or property to Buffalo Hospital Foundation in exchange for the Foundation's promise to make fixed annuity payments to one or two life annuitants. As its name suggests, a charitable gift annuity consists of two elements:
Payments can begin immediately or can be deferred for a period determined by the donor and set forth in annuity contract. The payment period can be measured by one annuitant's life (who is in most cases is the donor) or by the lives of two joint and survivor annuitants (who are usually husband and wife). Charitable gift annuities are not issued for a fixed term of years.
The annual income is a percentage of the original gift and is based on the age of the donor at the time of the contribution. At the end of the annuitant's life, the remaining principal benefits the health care mission of Buffalo Hospital.
It is important to note that unlike charitable remainder trusts, whereby the obligation to make payments is limited solely to the contributed assets, a charitable gift annuity is considered a general obligation of the Foundation. Charitable gift annuities, therefore, take on much of same characteristics as commercial annuities with the Foundation acting as the insurer.