Responding to Inflation With a Charitable Gift Annuity?Responding to Inflation With a Charitable Gift Annuity?

An immediate payment charitable gift annuity (CGA) is often deemed a model of certainty. Once a donor and the charity agree on the rate, nothing changes. Even if the charity mismanages the original contribution, the obligation to pay continues. Gift annuitants find the arrangement reassuring. The charity has the certainty of a gift ultimately benefiting it.

But what happens when a once-in-a-century event intervenes, such as a global pandemic? Let’s examine the case of Harry Hopeful. In January 2020, at age 70, Harry transferred $100,000 in cash for a CGA issued by his local hospital. The remainder interest will endow a program for patient education on nutrition and exercise. He receives 5.1%, paid in quarterly installments of $1,275. Near...