In this flash update, we discuss changes to qualified charitable distributions (QCDs) to create charitable gift annuities (CGAs) and charitable remainder trusts (CRTs), as well as the benefits of attractive CGA rates.

1. CGAs and CRTs created with QCDs

The Consolidated Appropriations Act of 2023 expanded the definition of QCDs to include distributions used to create CGAs and CRTs. Key provisions under the act and most recent update include:

  • The annual limit, indexed for inflation, increases to $55,000 in 2026.
  • This type of QCD is a one-time maximum transfer ($55,000 in 2026) in exchange with a charity for a CGA or to a qualified CRT.
  • The QCD can only be made once during the Individual Retirement Account (IRA) owner’s lifetime and must occur within a single calendar year
  • Each spouse may contribute up to $55,000 from their respective IRAs to a joint CGA, resulting in a combined $110,000 CGA.
  • At least one income beneficiary must be age 70.5 or older, and the CGA must have a payout rate of at least 5%, which effectively establishes a lower age limit.
  • Deferred-payment CGAs are not permitted, and the CGAs are not assignable.
  • The QCD gift does not qualify for an income tax charitable deduction; instead, the transfer is excluded from income tax liability.
  • Annuitants must be the IRA owner and/or the owner’s spouse.

For additional details visit the American Council on Gift Annuities (ACGA) website.

For individuals with IRAs who still need income, a QCD could be an effective option. Screening donor demographics for those age 70.5 and older will allow you to present this new giving opportunity. Charities currently accepting QCDs should be able to use the same process to fund QCD CGAs.

2. CGA Considerations

The ACGA’s suggested maximum payout rates remain unchanged from the January 1, 2024 suggested maximum payout rates. For example, for a single-life annuitant age 79 – the average age of CGA donors at the time of gift – the annuity rate is 7.8%

Compared to other relatively low-risk, income-producing options, such as government debt securities (Figure 1), rates available through CGA contracts remain attractive, especially for donors who value the philanthropic aspect of leaving the residuum to the sponsoring charity.

The IRS discount rate continues to fluctuate. The rate is used in calculating the charitable deduction for donors establishing new CGAs, which is pertinent for taxpayers who itemize deductions. In general, higher discount rates result in higher charitable deductions, and thus, larger up-front tax savings.

Figure 1.

Income Method

Income Rate (%)

Single-Life CGA Contract (Age 61 and older)1

5.3 - 10.1

S&P 500® Dividend Yield1

1.10

10-Year Treasury Note1

4.17

U.S. Government Money Market Fund

U.S. Net Yield2

3.81

1. Source: ACGA, FactSet® Research Systems Inc., PNC; All data as of 12/31/2025.

2. Source: sec.gov. data as of 11/30/25.

3. Finding the right approach with donors

The primary approach is to focus on the charitable gift aspect of the CGA contract. For donors, it is important to communicate how their gift will help advance the charity’s mission and goals.

Another approach is to emphasize the income stability of a CGA contract. Payments are fixed for life because the payout amount is based on the original gift value. Distributions to annuitants are not impacted by market volatility or changes to the original gift’s value, making this a beneficial option for individuals seeking steady income.

The mortality table (2010CM) used for gift annuity proposals is more conservative than its predecessor, resulting in a larger tax-free portion of the annuity, which might be attractive for prospects.

A CGA may also be used as an estate planning tool for beneficiaries or heirs. With certain exceptions, such as a spousal beneficiary, current legislation (SECURE 2.0 Act) requires IRA or other qualified funds to be distributed within 10 years of a decedent’s passing. Funding a gift annuity with remaining qualified funds allows those assets to be stretched over the annuitants’ lifetime. The annuity rates in effect at the time of the gift’s funding would apply.

Nonprofit Strategy & Solutions Group

PNC’s Nonprofit Strategy & Solutions group serves as a dedicated partner committed to empowering nonprofit organizations to achieve their missions. By combining national expertise with local knowledge, we provide comprehensive education and advice on governance, philanthropy, and financial sustainability — going beyond asset management to deliver actionable insights that address the most pressing challenges nonprofits face. With our deep community ties, practical nonprofit leadership experience and strong local market presence, we provide meaningful solutions that optimize resources and deliver a sustainable impact.

For more information, contact the team at IAMNonprofitStrategy@pnc.com.