The charity must receive at least $10,000 at the donor’s death
The charity must receive at least $50,000 at the donor’s death
If the donor lives exactly as long as his or her life expectancy, the charity must receive greater than $10,000
If the donor lives exactly as long as his or her life expectancy, the charity must receive at least $50,000
If the donor lives exactly as long as his or her life expectancy, the charity must receive an amount with a present value (at the time of the initial transaction) of greater than $10,000
A donor wishes to make a large gift to a charity, but is concerned that she may outlive her assets and be left with no income
A donor already plans to leave an estate gift to the charity, but would like to get an immediate income tax deduction
A donor wishes to receive a fixed income stream that won’t change or run out, even if market returns are poor
A donor wishes to receive income that is guaranteed by all of the assets of a large charitable institution
A donor wishes to completely avoid the payment of any capital gains taxes while receiving some income
The charity must maintain a reserve equal to their payment obligations in the gift annuities
The charity must maintain a reserve equal to their payment obligations in the gift annuities plus a designated surplus
The charity must have been in operation for a minimum number of years (such as three years) and must have a minimum amount of cash reserves (such as $300,000).
The charity must meet no financial, reserve, or age requirements at all
All of the above are examples of state rules regulating charities issuing gift annuities in some state
The annuitants may, on average, live longer than their actuarial life expectancy
The annuitants may, on average, live only to their life expectancy, but those with relatively large annuities live longer
The annuitants may, on average, live only to their life expectancy, but those with relatively small annuities live shorter
The annuitants may, on average, live only to their life expectancy, but those with relatively small annuities live longer
The charity’s investment returns may be less than those needed to fund the annuity payments
Managing gift annuity assets pools for nonprofit organizations
Selling commercial annuities as reinsurance for nonprofits issuing gift annuities
Giving advice to clients regarding the financial strength and stability of a nonprofit organization issuing charitable gift annuities
Selling charitable gift annuities on behalf of financial institutions
Giving advice to clients regarding the financial results of a charitable gift annuity
Paying a sales commission to fundraisers selling charitable gift annuities
Marketing charitable gift annuities primarily as investments, rather than as a means to make a charitable gift
Listing the rates available for donors as a percentages
Comparing the gift annuity rates with CD rates as a comparison of “yields”
Indicating that because gift annuity published rates are higher than other investment interest rates, they are therefore generating a higher “return”
Reinsurance can exactly match an income stream (from the annuity company) to the charity’s obligation to pay annuity checks.
Reinsurance removes the charity’s legal obligation to make the annuity payments
Reinsurance removes the risk from the charity that the annuitant may live much longer than expected.
Reinsurance can be used to cover the risk associated with accepting a few very large gift annuities, by allowing the charity to reinsure only those few annuities
Reinsurance prevents the charity from being in the odd circumstance of wishing for the early death of its donor annuitants.
An 80 year old annuitant is more likely to die
A 40 year old annuitant is more likely to die
An 80 year old annuitant is more likely to live 10 years past her original life expectancy
A 40 year old annuitant is more likely to live 10 years past her original life expectancy
An 80 year old annuitant is more likely to live to twice as long as her original life expectancy (thus resulting in 2 times the actuarially projected payout) than is a 40 year old annuitant.
A charitable gift annuity usually involves no costs charged directly to the donor for setup or administration, where a CRT often requires both expenses
Charitable gift annuities can commonly be created even for transactions as small as five to ten thousand dollars, where a CRT is usually not practical unless much more money is involved.
A charitable gift annuity is a simple (often one page) document, where a CRT often involves many pages and greater legal expense.
A charitable gift annuity pays a fixed dollar amount to the donor, where a CRT is required to pay a percentage of all trust assets
A charitable gift annuity is issued by the charity itself, where a CRT is created by the donor.
The donor can name a different person as recipient of the annuity payments other than the donor himself or herself
The donor can select a fixed period annuity rather than a life annuity to receive larger payments over a shorter term
The donor could gift the remainder of the annuity if income payments from it are no longer needed
The donor could defer the payments of the annuity to increase the value of the remaining payments by purchasing a deferred charitable gift annuity
The donor could opt for a two life annuity in which the payments only cease after the death of the second individual