Working in the national office of an organization with charitable gift annuity (CGA) donors and annuitants throughout the country, I befriended donors who didn’t have gift planners located in their geographic areas. My desk was basically a call center. And calls about gift annuities came regularly, enough that the organization maintained around 5,000 contracts and more than $100 million in the gift annuity reserves at any one time. Strong and consistent CGA marketing was primarily responsible for this—marketing to people who we knew cared about our organization’s mission. We weren’t offering anything unusual, just the ACGA-recommended rates and a solid organization backing up the annuities.
Among my responsibilities was managing regulatory compliance for fundraising. Keeping up with state requirements for CGAs and corresponding with state regulatory staff members helped me view regulations as beneficial to our organization. State requirements guided us to operate similarly to how an insurance company might operate. Because of this—and program choices made years earlier—our gift annuity reserves were managed in a way that meant they barely suffered during the financial downturn of the Great Recession.
While it’s not unusual for charitable organizations to have to make difficult financial choices, decision-making during the COVID-19 pandemic is exceptional. Even in the best of times, the economics (including benefits and risks) of offering gift annuities may not make sense for many organizations. It also may not be a good time to launch a CGA program. But, for organizations with established programs, I think they should find a way to stay the course. This can be a time to assess, shore up and get ready to make gift annuity promotion a consistent element of planned giving marketing as our economy begins to recover.
Donors who are in their mid-60s and older may be eager for the steady stream of payments from a gift annuity. Before the current economic turmoil began, I’d been noticing retirement planners and other financial professionals promoting commercial annuities as a portion of individual asset allocations. When someone is thinking about an annuity for herself or someone else AND she has an affinity for your organization, why not be the organization that offers her a GIFT annuity?
I’ve also been thinking that members of younger generations will, in the future, take an interest in gift annuities. Young adults are watching—experiencing—topsy-turvy financial markets, are financially cautious—often by necessity—and have generally been raised in a philanthropic culture (starting in preschool with pop can tab collections and trike races). For a well-managed CGA program, there is potential for great success over the long term.
It may be challenging right now for an organization to meet state-required reserve requirements so that it can responsibly continue to offer gift annuities. But, together with the rest of an organization’s planned giving efforts, it’s likely to be worthwhile to find a way to keep offering gift annuities. I think donors will continue to have a palate for them.
By Laura Knitt, Sharpe Group Senior Consultant
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