Suggested Gift Annuity Rates, Quality Training Opportunties, and Consumer Protection Advocacy

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Terry Simmons Fund

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The Terry L. Simmons Philanthropic Endowment Fund will provide scholarships to worthy individuals who would otherwise be unable to attend the Conference on Gift Annuities.

The Philosophy of Gift Annuity Agreements

Any attempt to establish a philosophy of Gift Annuity Agreements must emphasize the word "gift". These agreements constitute one method by which religious, charitable and educational organizations solicit and receive contributions to carry out their purposes.

A person who enters into a Gift Annuity Agreement with a religious, charitable or educational institution makes a gift to the institution and receives fixed payments for life. If the person could afford to do so, he or she would probably donate as an outright gift the entire amount paid to the organization; but he or she needs to make some provision for income while alive.

The gift annuity rates recommended by the American Council on Gift Annuities (ACGA) [a voluntary association of 23 members representing more than 1,500 gift annuity issuing agencies] have been computed to produce an average "residuum" or gift to the organization at the expiration of the agreement of approximately 50% of the amount originally donated under the agreement. Consequently, the rates are lower than, and are not in competition with, any rates offered commercially.

The gift annuity rates are based on actuarial studies of mortality experience among annuitants and a conservative projection of the rate of income to be earned on invested reserve funds. A professional actuarial firm serves the Council.

Offering gift annuities at rates higher than the recommended rates may jeopardize the gift that is to be available to the charity. If the rate is too high, other funds or the general assets of the organization may be required to carry out the terms of the agreements.

In some states, state statutes and regulations regulate Gift Annuity Agreements.

Where such laws are in force, the State Commissioner of Insurance generally administers them. While each state's law is different, the statutes generally deal with the filing of information, the maintenance of reserves and the rates of return of the gift annuity pool. Charitable organizations should consult their own legal counsel regarding the applicability of state law to their particular situations.

Gift Annuity Agreements have been utilized by some charitable organizations for more than a century. They are in established use and are favorably regarded by these organizations as a proper method of receiving contributions. Many leading educational, religious and charitable institutions have received significant gifts through Gift Annuity Agreements, thereby benefiting their work and at the same time returning to the donor practical benefits and spiritual satisfaction.

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