Below is a list of frequently asked questions. If you can't find what you are looking for in the list, please contact us.
What is the American Council on Gift Annuities (the ACGA)?
The ACGA is the nation’s only 501(c)(3) non-profit organization dedicated to suggesting actuarially sound maximum charitable gift annuity rates. The ACGA rates are used by the vast majority of non-profits that issue gift annuities. This helps donors make their philanthropic decisions based on the missions of the charities they wish to support, and not on which charity pays the highest rates.
The ACGA is comprised of a volunteer board of directors and nearly 600 organizational members throughout the country. Join or renew today!
What is a charitable gift annuity?
A charitable gift annuity (CGA) is a contract between a charity and a donor. The donor makes an irrevocable transfer of cash, marketable securities, or other assets acceptable to the charity. In return, the charity agrees to make fixed payments for life to one or two individual annuitants. There are no withdrawal or surrender provisions in a CGA.
The contributed property is generally held by the charity in a segregated gift annuity reserve account designed to fund its payment obligations. However, the annuity payments are a general obligation of the charity. The annuity is backed by the entirety of the charity's unencumbered assets, not just by the property contributed.
How does the ACGA promote philanthropy?
The ACGA’s primary focus is the publication of suggested maximum charitable gift annuity rates. The rates, which are determined using industry standard mortality tables and conservative investment return and expense assumptions, are recognized by charities, donors, and state insurance departments as being actuarially sound and in the best interests of all parties involved.
Charities and allied professionals have also looked to the ACGA for advocacy on behalf of donors and charities, and for expertise, insight and professional development opportunities through white papers, reports, webinars, and the ACGA’s biennial conference—the nation’s longest running conference in the gift planning profession.
What is the history of the ACGA?
The ACGA, formerly known as the Committee on Gift Annuities, was formed in 1927 to help charities with their gift annuity and planned giving programs. The focus was to study and recommend the proper range of gift annuity rates, the forms of contracts, the amount and type of reserve funds, as well as to provide insight regarding federal and state legislation and regulation regarding charitable gift annuities. The first maximum suggested gift annuity rates were adopted at the first Conference on Gift Annuities in April 1927.
Who is involved in the ACGA?
The ACGA is supported by its member organizations. Among our members are religious organizations, colleges, universities, hospitals, arts organizations, social welfare organizations, environmental charities, and other philanthropic entities and individuals. Some of these organizations have been involved with the ACGA since its early days, but many more have joined more recently, expanding the value and influence of the ACGA as it interacts with state legislators and Commissioners of Insurance. This reality has led many organizations to realize that the work of the ACGA is worth much more than the annual membership fee. Our members are united in the ACGA’s vision to advance and promote responsible philanthropy.
How can my organization become a member?
Click here to see "How to Join ACGA.”
What are the benefits of membership?
Your membership in the ACGA helps to preserve a long-time pillar of the philanthropic community and allows our volunteer board to continue the essential work we’ve been doing for 90 years:
- Sound suggested maximum charitable gift annuity rates. The ACGA’s suggested gift annuity rates are the industry standard. This adds credibility to your donor relationships and helps to place your organization’s gift annuity program on a sound footing.
- Professional development, valuable connections, and quality training opportunities. The ACGA consistently brings together top experts in the field of charitable giving to train and mentor our members and all who want to attend our biennial planned giving conference. Attendees can connect and collaborate with colleagues and allied professionals as they gain new insights about planned giving techniques, marketing and administration.
- Advocacy in relation to state gift annuity regulation, legislation and appropriate consumer protection. The ACGA monitors and responds to state gift annuity regulation issues that arise from time to time. Membership in the ACGA gives each organization that issues charitable gift annuities an opportunity to have impact on the regulatory process in their state and underscores your commitment to ethics, accountability and appropriate consumer protection for your donors.
ACGA members also enjoy discounts and access to exclusive resources. They are listed in the online membership directory of the ACGA’s website. The ACGA is committed to creating value in what you do for your donors and prospects, providing confidence to your organization’s leadership that your program is sound and operating in a manner consistent with industry standards.
How often are these rates changed?
The Rates Committee of the ACGA’s Board of Directors reviews rates on a regular basis. If the committee determines that changes are advisable, these changes are proposed to the entire Board for its approval. The suggested rates are based on industry standard mortality tables and conservative investment return and expense assumptions. Although changes may be made at any time if economic conditions warrant, a formal announcement of whether rates will change has traditionally been made every year in the spring. Schedules are re-published as of July 1 of each year. Historically, rates have changed about every two years. However, in periods of stable interest rates, several years might elapse between changes in rate schedules.
What rates are effective now?
The most current rates are shown here.
How are suggested gift annuity rates calculated?
The Rates Committee develops its schedule of suggested maximum rates by first targeting a residual gift to the charity equal to 50% of the original gift amount. The Committee and its actuaries then use a set of assumptions for annuitant mortality, expenses, and investment returns to identify for each age a tentative rate which will produce the targeted nominal residual gift. Finally, it determines whether the present value of the residual gift to charity, using the tentative gift annuity contract rate, is at least 20% of the funds transferred to the charity under the contract. If the tentative rate produces a present value in excess of 20%, the tentative rate becomes the final published rate for that age. If the tentative rate produces a present value of less than 20%, the rate is lowered until the 20% threshold is reached.
A similar process is used to suggest rates for two-life gift annuities. More information about the mortality, expense, and investment return assumptions may be found in the latest version of the ACGA Rates Paper.
When does the ACGA hold conferences?
Conferences are held on a biennial basis, that is, every other year, on even numbered years. Click here to learn more about our upcoming conference!
What is the focus of the ACGA conference curriculum?
At its biennial conference the ACGA seeks to offer education in three areas:
- Introductory education for new planned giving officers
- Continuing education for experienced planned giving officers
- Administration, practical considerations, and technical guidance for gift annuity programs. Providing this information for a charity’s treasury, finance, and business officers is a hallmark of the ACGA conference.
It is important to note that the education in all three areas is not restricted to charitable gift annuities. Our Conference Committee solicits the highest quality speakers from across the country to make presentations on topics ranging from marketing, program management, donor relations, gift planning technical issues, prospect research, and the financial, investment, and legal considerations of gift planning programs.
What are the steps involved in establishing a gift annuity program?
The governing body of a charity interested in establishing a gift annuity program needs to first educate itself on the both the advantages and disadvantages of operating a charitable gift annuity program. There are legal and financial responsibilities as well as staff responsibilities for marketing, creating agreements, program administration as well as state filings where required. If your governing body determines that it will establish a gift annuity program, the following steps should be considered:
- Determine the requirements in the states in which your organization wishes to issue agreements. This generally includes the state in which your organization is domiciled as well as additional states where its donors live. See the state regulations section of this web site. It might be wise to begin with a limited number of states.
- Once you determined the states in which your organization will issue agreements, either contact the state licensing office for information or contact an outside firm to have them guide your organization through the process.
- Determine whether your organization or an outside firm will administer and invest the gift annuity program and prepare the appropriate reporting for internal monitoring and state filings.
- Create a marketing plan.
- Determine whether additional staffing is needed or how existing staff will be deployed.
- Purchase an appropriate software package to support rate and charitable deduction calculations. There are number of firms that provide such software.
- While waiting for those states which require your organization to have a permit to issue agreements, you can begin to formulate promotional strategies to let supporters know that your organization issues gift annuities.
Click here to see ACGA "Recommended Charitable Gift Annuity Best Practices"
What is the Philanthropy Protection Act of 1995?
The Philanthropy Protection Act of 1995 was the primary legislation passed unanimously by the United States Congress to clarify that charitable organizations are not in violation of federal anti-trust laws when issuing charitable gift annuities pursuant to the suggested maximum rates established by the American Council on Gift Annuities. This legislation facilitated the disposition of a federal class-action lawsuit that alleged that ACGA, and its members and charities using the ACGA rates, were acting in violation of federal law to restrain trade and illegally fix gift annuity rates. The Philanthropy Protection Act of 1995 recognized the voluntary nature of the use of ACGA rates and gave “safe harbor” guidance to charities on how to ensure they were not acting in violation of federal law or subject to federal securities laws.
What does the Philanthropy Protection Act of 1995 require of charities?
In addition to exempting charities from restraint of trade laws, the Philanthropy Protection Act of 1995 brought life-income gifts (including gift annuities) offered by charities under registration exemptions of federal and state securities law so long as the charities provide “full and adequate disclosure” in a timely manner and do not pay referral fees to anyone for bringing in the gift. The Act also exempts the charity’s staff members who meet certain requirements from being treated as brokers who have to register according to federal securities regulations. For more information, please review the Philanthropy Protection Act of 1995. Although many years have passed since the lawsuit, the requirements of the PPA are in force today, and ACGA recommends that all non-profits offering planned gifts review whether they are in compliance with this important piece of legislation.
What is the relationship between floating monthly IRS rate (i.e., the Charitable Federal Mid-Term Rate or CFMR) and gift annuity rates?
The Charitable Federal Mid-Term Rate (CFMR) is used to calculate allowed charitable deductions for federal tax purposes, but is not used in developing the ACGA’s suggested rate schedule. Nonetheless, the CFMR and gift annuity rates tend to vary with one another over time. For example, if the CFMR were to decrease dramatically over the course of a year, it is likely that the ACGA’s suggested rates would also decrease.
We encourage gift planners always to verify that new gift annuities will produce the required minimum charitable deduction of 10% of the value of the funds transferred. The ACGA’s suggested rate schedules typically result in deductions that pass this test; however, in declining interest rate environments (which results in declining CFMRs), it is possible that the suggested payout rate might need to be lowered to meet the 10% minimum requirement. This is particularly true for contracts that make payments to younger annuitants.
Are charities required to re-insure gift annuity contracts and what is the ACGA’s position on this issue?
Although some states mandate investment guidelines and reserve requirements for gift annuity assets, there is currently no requirement for charities to reinsure charitable gift annuities. The decision to reinsure gift annuities is one that should be reviewed and determined by your organization’s legal, financial and administrative team. ACGA does not offer an opinion on reinsurance of gift annuities.
Our organization is looking for assistance with administering our gift annuity program and/or management of our CGA assets. Does the ACGA provide these services or provide a list of recommended firms?
The ACGA does not provide administrative services for gift annuity and/or planned giving programs, nor does the ACGA comment on or recommend specific vendors or services offered by vendors. You can view our virtual exhibit hall which might provide you with some firms to consider. We also recommend contacting charities with established planned giving programs to see what institutions they use and inquire as to their level of satisfaction with their providers. Resource listings might also be found in the Chronicle of Philanthropy and Non-Profit Times.