How Do Charitable Annuities Work? 
Charitable annuities are traditionally set up by a grantor who gifts a sum of money to a trust established with a charitable organization as the beneficiary . The trustee of the trust then purchases an annuity with the funds and pays the grantor a sum of money based on an amount specified when the gift and trust are established . The grantor receives a tax deduction for the gifted amount and can carry the deduction to future years of the entire deduction reduces income tax liability to zero . Upon the passing of the grantor , any remaining funds in the trust are then given to the charitable organization . 