Degree of Regulation: Under Sections 20-103 and 20-119, Arizona Revised Statutes, charitable gift annuities are exempt from insurance regulation. To qualify for the exemption, charities must have been in continuous operation for at least three years (or be the successor or affiliate of an organization in operation for that period of time), have at least $300,000 in unrestricted cash, cash equivalents or publicly traded securities, not counting the assets transferred for the annuity gift, and have audited financial statements for the two years prior to entering into a gift annuity agreement.

Notification/Contact with State Regulators: Notification is not required.

Disclosure Language Required: A charity is required to give the donor a detailed disclosure statement prior to accepting any contribution for the annuity. The disclosure must include certain information about the organization, as well as specific provisions regarding the annuity not being subject to state regulation and not being approved by the state.

Suggested Language for State Disclosure: The first of these two provisions was previously required in the agreement, and while that is no longer the case now that a disclosure statement is required, it is advisable to continue to include it in the agreement.

“This charitable gift annuity is not insurance under the laws of this state, is not subject to regulation by the director and is not protected by any state guaranty fund.”

“The State of Arizona and the Department of Insurance have neither approved nor disapproved of the gift annuity being offered, nor have they reviewed the information provided to determine its accuracy or completeness.”

Further Details: Payment of a commission, fee, or other form of compensation contingent on the donation or amount of the charitable gift annuity is prohibited. If a charity issues an annuity without being fully compliant with all provisions of the law, the donor has a specific cause of action to seek recovery of the contribution amount (less any payments received), plus costs and fees.

Links to State Regulations Pages:

Arizona Revised Statutes Section 20-103, click here.

Arizona Revised Statutes Section 20-119, click here.