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Pennsylvania

Regulation of Charitable Gift Annuities

Degree of Regulation:

Issuance of charitable gift annuities is regulated under Pennsylvania Statutes, Title 10, Sections 361-364.

In order to issue gift annuities in the state, a charity must meet the following regulatory requirements:

  • have been in operation for at least three years (or be the successor or affiliate of an organization in operation for that period of time)
  • have unrestricted assets of at least $100,000
  • maintain gift annuity reserves
  • be registered for charitable solicitation with the Pennsylvania Department of State (unless exempt from such registration; see paragraph 6, option 3 in the disclosure language below)

Actions Required for Exemption:

No filing with a state agency is required.

Disclosure and Agreement Content Requirements:

Very detailed disclosure language is required.

Suggested Language for State Disclosure:

The parties to this Agreement understand and acknowledge that:

1) As of the date of this Agreement, the fair market value of the property transferred to ABC Charity is substantially in excess of the fair market value of the annuity, and the difference between those values constitutes a gift by the Donor(s) to ABC Charity for its charitable purposes.

2) ABC Charity has advised the Donor(s) that a charitable gift annuity is not designed primarily as an investment but rather as a charitable gift.

3) ABC Charity's promise to pay the annuity described in this Agreement is not insurance under the laws of Pennsylvania, is not subject to regulation by the Pennsylvania Insurance Department and is not protected by the Pennsylvania Life and Health Insurance Guaranty Association under Article XVII of the Act of May 17, 1921 (P.L. 682, No. 284), known as the Insurance Company Law of 1921, or other protective device.

4) To obtain confirmation that ABC Charity, as a Pennsylvania qualified charity, is an organization described in section 170(c) of the Internal Revenue Code of 1986 (Public Law 99- 514, 26 U.S.C. section 170(c)) or any successor provision; or to obtain audited financial statements showing that ABC Charity, as a Pennsylvania qualified charity, has unrestricted and unencumbered assets in the form of cash, cash equivalents or publicly-traded securities of at least $100,000 plus one-half of the principal value of any annuities issued by ABC Charity and in effect at the time such statements are requested, the Donor(s) may contact [insert name, address and phone number of appropriate person or office].

5) As a Pennsylvania qualified charity which must have been in existence for at least three years, ABC Charity in fact came into existence [insert date of incorporation].

6) In addition to meeting the Pennsylvania qualified charity criteria described in items 4) and 5), ABC Charity is a Pennsylvania qualified charity because it is also:

Choose one from the following, delete the others:

1-A an educational institution, the curriculum of which in whole or in part is registered with or approved by the Pennsylvania Department of Education, either directly or by accreditation by an accrediting body recognized by the Pennsylvania Department of Education.

[OR]

1-B an auxiliary association[or]a foundation[or]a support group which is directly responsible to an educational institution. 2-A a hospital which is subject to regulation by the Pennsylvania Department of Health or the Pennsylvania Department of Public Welfare.

[OR]

2-B a hospital foundation which is an integral part of a hospital subject to regulation by the Pennsylvania Department of Health or the Pennsylvania Department of Public Welfare.

[OR]

3 a charitable organization which is required to file or does file a registration statement with the Pennsylvania Department of State under the provisions of the Act of December 19, 1990 (P.L. 1200, No. 202), known as the Solicitation of Funds for Charitable Purposes Act.

[OR]

4 a senior citizen center[or]a nursing home which is nonprofit and charitable and which voluntarily files a registration statement with the Pennsylvania Department of State under the provisions of the Act of December 19, 1990 (P.L. 1200, No. 202), known as the Solicitation of Funds for Charitable Purposes Act.

[OR]

5 a bona fide duly constituted religious institution [or] a separate group [or] corporation which forms an integral part of a bona fide duly constituted religious institution which is tax exempt pursuant to the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. section 1 et seq.); and no part of the income of which inures to the direct benefit of any individual; and the conduct of which is primarily supported by government grants or contracts, by funds solicited from its own membership, congregations or previous donors and by fees charged for services rendered.

[OR]

6 a corporation established by an act of Congress that is required by federal law to submit annual reports of its activities to Congress containing itemized accounts of all receipts and expenditures after being fully audited by the United States Department of Defense."

Reserve Requirements:

A charity must maintain one-half of the principal value of outstanding annuities.

Annual Reporting:

None

Compliance/Enforcement:  

None specifically stated

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