Degree of Regulation: Exemption from securities regulation for issuance of gift annuities - detailed application to state securities commission required. There are no specific years of operation or minimum asset criteria required of a charity.
Notification/Contact with State Regulators: Application is to be made to the Securities Commissioner prior to issuance of any gift annuity in the state. Charities that have issued gift annuities without having first obtained an exemption must provide information on the circumstances surrounding such issuance.
Disclosure Language Required: Disclosure language is required in the annuity agreement as follows:
"This charitable gift annuity is offered pursuant to a claim of exemption from registration under Section 37(h) [Section 8-6-10, Code of Alabama, 1975] of the Alabama Securities Act and Section 3(a)(4) of the Securities Act of 1933. A registration statement relating to this annuity has not been filed with the Alabama Securities Commission or with the United States Securities and Exchange Commission. Neither the Alabama Securities Commission nor the United States Securities and Exchange Commission has passed upon the value of this charitable gift annuity or approved or disapproved of its offering, or passed upon the adequacy or accuracy of this agreement. Any representation to the contrary is unlawful."
In addition, the donor must be given (and must acknowledge receipt by signing) a detailed disclosure that must contain certain specific information, including the following:
i) "The payments made under a charitable gift annuity are backed by the full faith and credit of the organization and are not insured or guaranteed by an insurance company or backed in any way by the State of Alabama."
Further Details: A charity must maintain a gift annuity reserve fund, segregated from other assets of the organization, but there are no specific investment restrictions imposed on the fund. The application process is quite involved, and a charity must provide documents concerning its organizational structure, financial condition, and the marketing materials and solicitation process used in issuing gift annuities. A detailed list of the requirements, including the content of the disclosure statement noted above, may be obtained by contacting the securities commission. A Uniform Application for Securities Industry Registration of Transfer (Form U-4) must be filed by those who market gift annuities or sign the annuity agreement on behalf of the charity. These registrations must be renewed on an annual basis, and a charity must also file a copy of its audited financial statement each year.
The Alabama Securities Commission provides a "Requirements List" to charities that inquire about the steps necessary to obtain an exemption from regulation.
Links to State Regulations Pages:
Code of Alabama, 1975, Section 8-6-10(8), click here.
For a copy of the Requirements List, click here.
Alabama Securities Commission Contact Information:
Lisa M. Tolar
Securities Registration Manager
Licensing and Registration
Alabama Securities Commission
770 Washington Avenue, Ste. 570
Montgomery, AL 36130-4700
Phone: (334) 242-2984, Toll Free: (800) 222-1253
Fax: (334) 242-0240
E-mail: lisa.tolar@asc.alabama.gov
