The Value of a Gift Annuity Program

Measuring the value of a gift annuity program is not always as easy as “how much money did we make?”

In fact, if you add up all of the staff time dealing with headaches in administration, unexpected losses in the stock market, and annuitants living way past their life expectancies, you might actually come away with the conclusion that your gift annuity program is a money loser, possibly a huge loser.

Sadly, I have seen it several times where the lack of professional oversight and/or marketing/promotion and/or significant numbers of potential prospects have all contributed to serious disaster scenarios for charities trying to be in the planned giving business.

But, there can be a silver lining and the following story from NJIT hits the point right on the nail:

http://www.njit.edu/news/2012/2012-063.php

For those who didn’t click through, in short, NJIT just received word of a $5 million bequest from none-other than an apparently smaller level gift annuity donor.  Their own website summed it up very well:  “stunned.”

And, don’t think that maybe NJIT has some powerhouse gift annuity program and that it might not apply to your more modest program.  I consulted there for a few months several years ago, and it had plenty of room to grow and plenty of headaches to fix.

Why I love the story is that it clearly exemplifies the opportunity many planned gifts afford institutions: an opportunity for long-term, ongoing relationships with donors.  NJIT staff obviously recognized that opportunity, stayed in touch, and the result speaks for itself.

Ok, if you have gotten this far in this blog post, you deserve a little extra for effort.  There is another reason why I like this story – I actually spoke with Mrs. Hartmann (the donor in the story) in 2007 when I was filling in as the outsourced planned giving officer.  The name sounded familiar to me and I did a search on my gmail account to see if I had mentioned the name in any of my correspondence. Sure enough, there was a short note I drafted and forwarded to the secretary at NJIT to send out to Mrs. Hartmann in 2007.  It was a  short pleasant note, thanking her and her husband and offering to be of any assistance.

Just another little nicety that goes unappreciated by management until something like this happens.

3 comments

  1. Great story. I normally fall into the CGAs-may-be- more-hassle-than-benefit camp and my charity has lost money on a handful of contracts in recent years (perfect storm of bad markets, high payouts, and donor longevity), but agree that annuities create a lifelong tie with the issuing charity that often leads to a bequest as well as consistent annual giving. One common way we see this: donors who give us either the tax-free or the taxable portion of their annuity payments each year.

  2. Thank you for commenting!!

    One of the larger nonprofits I work with, and which has a very large CGA program, has actually kept track of all of the bequest dollars that come in each year from deceased CGA donors. Paints a very powerful picture.

    On the flip side, though, we in the planned giving world have to admit that plenty CGA donors don’t include our charities in their estate plans Pretty disappointing when that happens.

  3. Great post, Jonathan. More often than not annuitants don’t make bequest intentions. The annuity is simply much more transactional and the donors believe the remainder interest is their gift. I think the reason organizations question the value of their gift annuity program is for the reasons you mention–they either haven’t gathered the data to support it nor have they marketed it effectively.

    Phyllis

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