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Sample Gift Annuity Disclosure Statement

The Philanthropy Protection Act of 1995 requires nonprofit organizations to deliver a Gift Annuity Disclosure Statement to all prospective donors to the Gift Annuity Fund at the time of the solicitation, using a letter of pamphlet format that provides information similar to the following:

“Dear_________________.

Thank you for your recent contribution request for information about a charitable gift annuity. Per the gift annuity agreement, guaranteed payments of the amount indicated will be paid to named annuitants for life.

These payments are a general obligation of our organization, and they are backed by all of our assets. At (indicate date) our total invested funds exceeded $ _______ (indicate book or market value), and they are invested (describe the general types of investments held by the organization, such as stocks, bonds money market funds, and federal obligations, but do not list assets by name.) (Note: If you offer gift annuities in states that require maintenance of a segregated reserve fund, you should add the following sentence to this paragraph: We also maintain a gift annuity reserve fund valued at more than $ _______ that is invested in accordance with the laws of the states in which offer gift annuities.)

With a gift annuity, you simultaneously make a charitable gift and provide guaranteed payments for life to yourself and/or another person. The fact that you are making a charitable gift may entitle you to income, gift and estate tax deductions.

However, because a charitable gift is involved, the annuity rates offered by (name of charity) are lower than those available through commercial annuities offered by insurance companies and other financial institutions.

The (Name of charity) was established in (indicate date). Responsibility for governing the organization is vested in a Board comprised of persons who are (describe manner of selection).

Common investment funds managed by our organization are exempt from registration requirements of the federal securities laws, pursuant to the exemption for collective investment funds and similar funds maintained by charitable organizations under the Philanthropy Protection Act of 1995 (P.L. 104-62). Information in this statement is provided to you in accordance with the requirements of that Act.

We would be pleased to provide any additional information at your request.

Sincerely yours,”

Prospective donors must receive the Disclosure Statement prior to making their first annuity gift, at the time of the gift solicitation.

The charity’s prospective donor file (the charity’s paper trail) should document the sending of this federally mandated Disclosure Statement. There is no federal requirement that the prospective donor sign it. Each charity should look to its own professional advisors to determine the applicability to their needs of this suggested draft.

Different state mandated disclosure statements are to be signed by the donor and maintained in the files of the charity during the lifetimes of the annuitants named in the agreement. Each state law separately mandates the wording or subjects to be covered in such a state mandated Disclosure Statement. This MAY be (and sometimes in some states MUST be) handled by making each state specific disclosure statement, required by the situs of the charity AND the residence state(s) of the annuitant(s) at the time of the gift, a part of the gift annuity agreement, as a separate paragraph of the gift annuity agreement, in type no smaller than that used in the body of the agreement generally.