Most gifts to charity are pretty easy to understand — you give, the charity receives. But how about a gift with an extra wrinkle — you give, the charity receives, and you get monthly (or quarterly) income back from the charity for as long as you live?

Reasonably enough, it's called a charitable gift annuity (CGA), and is primarily of interest to older donors who have the desire and ability to make a sizable gift but are concerned about future income needs and want some extra money coming in that they can "count on."

If this strikes your fancy, you probably have some questions, such as:

• How much will the monthly income amount to? That depends on the rate of return offered by the annuity, the age of the donor, and the size of the gift.
• What is it that determines the rate of return? There are three things. First, your age — the older you are, the higher the rate (because, frankly, you're not expected to live as long).

Second, do you want the monthly payments to last only during your lifetime, or through the lifetimes of both you and your spouse? Obviously, if the payments are designed to last through two lifetimes, the rate can't be set as high.

Typical rates for a single individual are shown in the table nearby. They're based upon actuarial life expectancies. (Note: The table is abbreviated; rates will be based on your specific age.) As you can see, the older the annuitant, the higher the maximum annuity payment. For gifts where both you and your spouse are to receive income, the table is a little more complicated, but typically the annual annuity payment will be in the range of 5.4% to 10.3% of the value of the donated property.

Third, will the charity follow the rate guidelines published by the American Council on Gift Annuities (ACGA)? Most do.

• Do I get a tax deduction for my gift? Yes, but not, of course, for the full amount of the gift because you received the annuity in return.

There's an IRS-approved formula involved that takes into account your age (and that of your spouse if you choose the "joint-and-survivor" option), the payout rate you'll be receiving, and the federal discount rate. The charity can give you the tax deduction amount based on your particular situation.

• At what age would a CGA be appropriate? Typically not until you reach your mid-sixties or later. (Younger donors likely would find it more advantageous to arrange a "deferred" gift annuity where the monthly income begins after retirement when they may be in a lower tax bracket, but they'd be able to use their tax deduction while they're still working, when their tax bracket is likely to be higher.)
• How is the monthly income taxed? If the gift is an appreciated asset such as stock or land, the monthly payments will be broken into three parts for income tax purposes: One part will be tax-free, representing a return of the donor's purchase price or "tax basis"; one part will be taxed as capital-gain income; and one part will be taxed as ordinary income. If you (or your spouse, if applicable) live beyond your life expectancies, the monthly payments will then be treated as 100% ordinary income.

To show you how a CGA might work in practice, here's an example provided at my request by my friends at The Great Commission Foundation of Campus Crusade for Christ: