Regulation of Charitable Gift Annuities
Degree of Regulation:
- Years of operation - three years continuous operation (or successor or affiliate of organization in operation for that time period)
- Minimum assets - $300,000 in unrestricted cash, cash equivalents or publicly traded securities (excludes CGA funding assets)
- Audited financial statements - for the two years prior to entering into CGA agreement
- Commissions not permitted - no compensation to anyone contingent on the donation or amount of the gift annuity (excludes regular compensation paid by the charity to its employees).
Actions Required for Exemption:
No filing with a state agency is required.
Disclosure and Agreement Content Requirements:
While a specific disclosure in the agreement is not mandatory, based on historical requirements it is recommended that the charity include the following language in the gift annuity 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 following language is also recommended based on Sec. 20-119(b) #4-5:
“The State of Arizona and the Department of Insurance have neither approved nor disapproved of the charitable gift annuity being offered and have not determined whether any of the information provided to the donor is truthful or complete.”
Other Required Disclosures
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.
The following statement should be included, and be conspicuous and printed in at least ten point bold faced type:
“[Charity] will make additional financial information, including our most current audited and interim financial statements, available to the donor on request.”
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: