Degree of Regulation: Issuance of charitable gift annuities is regulated under Maryland Code Section 16-114. A charity must provide proof of activity in the state for at least ten years. A segregated reserve fund is required.

Notification/Contact with State Regulators: Application to the State Insurance Department is to be made prior to the issuance of any annuity in the state.

Disclosure Language Required: A charity is required to disclose to the donor that the annuity is backed only by the charity and not by the state. The donor must sign an acknowledgment that the disclosure has been received, or the disclosure can be included in the annuity agreement if the donor signs the agreement.

Suggested Language for State Disclosure: “Payments made under charitable gift annuities are backed solely by the full faith and credit of the issuing organization and are not insured or otherwise guaranteed by any government agency.”

Further Details: Permits to issue gift annuities are limited to educational or religious organizations, Maryland hospitals, or community foundations. “Educational organization” does not simply mean a university, college, or school – an organization with an educational component to its mission may receive a permit. The requisite in-state activity must be related to the category under which an organization applies, e.g., a charity applying as an “educational organization” must provide proof of 10 years of educational activity in the state. A community foundation may be granted a permit after five years of existence provided that it maintains 100% of admitted assets of contributions made to the community foundation. However, there is no need to have an ongoing physical presence in the state (such as an office). Investment of the segregated reserve fund is subject to the prudent investor standard. An annual report on the reserve fund is due 90 days after the end of the charity’s fiscal year.

Links to State Regulations Pages:

Maryland Code, Section 16-114, click here.

Maryland Insurance Department Contact Information:

Howard Max
Associate Commissioner
Maryland Insurance Administration
525 St. Paul Place
Baltimore, MD 21202-2272
(410) 468-2205