The Planned Giving Blogger

The art and science of planned giving.

Survey on gift annuities: the results are in.

with 9 comments

The American Council on Gift Annuities has just released its 2009 Survey of Charitable Gift Annuities and there are some interesting findings worth noting.  Nearly 600 organizations responded to the ACGA survey and while there was skewing toward institutions of higher education, the sample size is sufficiently large and the data sufficiently cross-tabbed to still find relevance even if you’re not a college or university.

Here are some of the statistics I found interesting:

1.  Nearly 72% of immediate annuities are issued to donors 80 or older.  In fact, only 9% of annuities are issued to donors 70 or younger.  This is clearly partly a function of who we market annuities to but it seems to be more a function of who is interested in annuities.  If that’s true, and if you’re on a tight budget, then marketing annuities to donors 71+ will capture nearly all of the most likely prospects.

2.  Most annuities are funded with cash (80% of organizations reported that gifts of cash represented between 76% and 100% of the assets used to fund gift annuities) and most are for one life (72.4%).  I have long advocated for simplifying our marketing messages.  These findings suggest to me that charts with one life and two life rates are unnecessary and may be confusing.  Similarly, diagrams or language that describe the varied assets that can be used to fund a gift annuity are also unnecessarily complicating.

3.  The average size of gift annuities varied widely by type of organization, with, not surprisingly, public colleges and universities reporting an average of $78,548 and arts organizations reporting one-third that amount, at $22,195.  When you’re writing an example to include in marketing materials or publishing a story of a donor who created an annuity with you, try to use examples that closely track with your own average amount.

For me, the other important takeaway is the importance of tracking your own statistics.  Not only are your own data useful for your marketing and forecasting but with this report in hand, you can see how you’re doing compared to the sector.

Phyllis

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Written by Phyllis Freedman

May 10, 2010 at 11:50 pm

9 Responses

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  1. Perhaps it was also covered in previous surveys, but I found the statistics on impact on annual giving very interesting. For 96.3% of donors, donors who create a charitable gift annuity either maintain or increase their annual giving. This is critical information for anyone with a strong annual campaign who wants to keep it as such, but also increase planned giving opportunities.

    Heather Powers

    May 11, 2010 at 11:01 am

    • Good point, Heather! It should be a comfort to the direct mail/annual fund folks down the hall that planned giving marketing certainly doesn’t interfere and may actually help. Thanks for commenting.

      Phyllis Freedman

      May 11, 2010 at 11:26 am

  2. One point of clarification regarding this survey, specifically regarding the statistic that “Nearly 72% of immediate annuities are issued to donors 80 or older.” I believe that statistic involves a question of how old the charities’ oldest annuitant was at the time of gift … not the average age of annuitants (see page 17 & 18.)

    The report rather indicates that the majority—63.5%–of immediate annuitants were “80 or younger” at the time of the gift (page 16.)

    That being said, it‘s certainly true that the “sweet spot” for marketing CGAs is age 71+. But to focus only on 80+ would miss the majority of viable candidates.

    Jim Ray

    May 11, 2010 at 4:56 pm

    • Jim, thanks for catching my misinterpretation of the data. I would always recommend that budget permitting, organizations mail across the entire spectrum of ages.

      Phyllis

      Phyllis Freedman

      May 11, 2010 at 8:06 pm

  3. I think it is actually rather sad that so little planned giving happens in the younger age groups. We all know that there are plenty of people well under 70 who do well for themselves. Perhaps they give in unplanned fashions- although it isn’t relevant to your topic, I’d be curious to see what the statistics are for unplanned giving in the younger age groups vs. older.

    Jos Myers

    May 15, 2010 at 11:56 am

  4. Gift annuity marketing is largely a case of the self-fulfilling prophesy. My experience has been that, by marketing to a broader spectrum of ages, we often pick up some annuitants at age 55 or so, and, naturally, even more at 60.

    Some charities, foolishly, however, have high age minimums, which also virtually guarantees that their gift annuity pools will lose considerable principal in low-interest environments.

    As long as prospective annuitants are made aware of the fact that, as a trade-off for income security, they lose inflation protection, charities should not be reluctant to balance their annuity pools with younger annuitants. Many will make repeat gifts, year after year, and the automatic “laddering” of those contracts, and higher rates as they age, offset the loss of inflation protection.

    Jeff Steele

    June 9, 2010 at 7:21 pm

    • Thanks for making that interesting point, Jeff. How young have you seen an organization go with respect to the minimum age? And are you saying that even at those younger ages the payments are not deferred but start immediately? Just want to make sure I understand your suggestion!

      Phyllis

      Phyllis Freedman

      June 10, 2010 at 8:48 am

      • Yes, Phyllis, I was referring to immediate, not deferred, annuities. For a variety of reasons, some younger individuals have an actual or perceived need for current income, but, in my financial planning practice, individual clients often make CGA gifts to loved ones with a need for immediate income, such as a young couple just starting out, with limited savings and salaries.

        As to my institutional clients, I usually recommend that annuities be offered down to age 50, but I have seen other charities publish or link to ACGA’s full rate chart on their websites without even mentioning a minimum age.

        Jeff Steele

        June 10, 2010 at 10:07 am

      • Thanks for the clarification. Very helpful!

        Phyllis

        Phyllis Freedman

        June 10, 2010 at 10:58 am


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