Harrisburg – The Senate today approved legislation that will make it easier for charities and nonprofit organizations to receive large financial gifts to fulfill their missions, said Senator Dan Laughlin (R-49).
Senate Bill 731 would provide protections for annuitants who are donors to a charity that provides for Charitable Gift Annuities.
Charitable Gift Annuities provide donors the opportunity to support a charitable organization, while receiving fixed annuity payments. The payments can begin immediately, or the donor can choose to defer the payments to a future date. The terms of the arrangement are set forth in a contract signed by the nonprofit and the donor. The arrangement terminates on the death of the annuitant, at which point the nonprofit uses the remaining funds on its mission.
Under current law, it is very difficult for smaller charitable organizations to utilize Charitable Gift Annuities, because the amount of unrestricted cash or publicly traded securities needed to cover the minimum is impractical and unworkable. A smaller foundation or charity must commit a significant amount of foundation resources to the annuity and not to its mission.
Senate Bill 731 would allow charities to use a de-risking annuity contract to satisfy the financial requirements of a qualified charitable gift annuity and qualified charity. The annuity contract purchased from a commercial annuity company matches substantially all of a charity’s future payments arising from a charitable gift annuity contract obligation.
“Allowing charitable organizations to transfer their risk to a commercial insurance company will give small nonprofit organizations the opportunity to receive a large charitable gift annuity that they previously may have been prevented from receiving,” said Senator Laughlin.
The bill will be sent to the House of Representatives for consideration.
CONTACT: Matt Azeles mazeles@pasen.gov