Posted November 1st, 1997

Maneuvering the Maze of Gift Annuity Registration

Gift annuity registration. A frequent topic of debate in your Monday morning staff meeting and around the lunch table at local gatherings of fund raisers. Does our state regulate gift annuities? Do we need to register if we only have a few annuities? Why must we register in other states besides our own? Is the process the same in all states? How long does it take? What will it cost?

If these questions sound familiar, you are not alone. To clear up some of the confusion, here are some observations based on managing a number of registration processes in all of the states that currently regulate gift annuities.

Overview of regulation

Departments of Insurance (DOI) in 14 states currently regulate charitable gift annuities. Ten require that you apply for a permit or certificate of authority, and four require that you notify the DOI of your intent to issue charitable gift annuities in the state . If your organization or institution issues gift annuities and is located in one of these states OR is located elsewhere but issues gift annuities to residents of the state, you must generally register with that state’s DOI. Each state’s laws are very clear: if you issue ANY* charitable gift annuities to their residents you must have a license to do so.

One step at a time

The first step in the registration process is to contact the DOI in these states and request an application. Though there are basic similarities, each application is somewhat different. Completely familiarizing yourself with the applications at the outset will give you a general idea of what is required and may save duplicate effort.

Typical requirements

You may be surprised to find that your organization’s gift annuity program already meets many, if not most, of the requirements of most states.

Maintaining a segregated annuity account, having specific gift annuity contract language, showing proof of your tax-exempt status, and being in “good standing” in your home state are some of the common requirements of all the states. Other items, such as maintaining a surplus, providing board biographies, registering with other state offices, having rates that return a 50% residuum (as the American Council on Gift Annuities’ rates are designed to do), and following specific investment guidelines for the reserve account are required by some states.

What will it cost?

Time and money are often unknowns when undertaking something new, and the gift annuity registration process is no exception. After having filed a large number of applications, an important bit of advice is to be sure to provide all the information the application requests the first time you submit it. This will expedite the process of navigating through the bureaucratic maze. Don’t send incomplete information in hopes the DOI won’t “notice” they will! Also, having access to someone who has either gone through the registration process before or who can provide you with support is extremely valuable and can save a great deal of time.

Take it easy

The key to success in managing gift annuity registration is to approach the process with a positive attitude and a realistic time frame for each state’s procedures. Some states, such as California, will require a greater commitment of time than others.

The good news is that the trend appears to be toward less cumbersome registration requirements and more uniformity nationwide. In recent years both Florida and Maryland have changed their laws to make the charitable gift annuity registration process more “user friendly.” And currently the National Association of Insurance Commissioners is seeking to adopt uniform registration requirements to be recommended to all states.

So, as you forge ahead with the gift annuity registration process or begin the undertaking for the first time, know that you are not alone and there are, in fact, ways to expedite the process if you proceed in a cautious and orderly manner.

*One exception is New York, where you are currently allowed to issue annuities until such time as your reserve exceeds $80,000.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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