Filing Requirements for Charitable Gift Annuities

{Ala. Code § 8-6-10}

    1. Restricted agent registration of organization’s salesmen is required. Issuer should submit a FORM U-4 / INSTRUCTIONS and a $70.00 registration fee for those individuals who are to solicit funds on behalf of the organization. Restricted agent registration should be renewed annually.
    2. Provide a complete copy of the organization’s articles of incorporation demonstrating its nonprofit status.
    3. Provide copies of all relevant advertising.
    4. There should be a separate accounting for the charitable gift annuities.
    5. Describe the organizational structure of the issuer, including how the members of its Board of Directors or other legal governing body are chosen or replaced.
    6. Identify all directors, trustees, and executive officers or persons having similar authority of the issuer.
    7. Disclose if any director, trustee, or officer of the issuer, has, during the past ten years, been convicted of any criminal proceeding (other than for traffic violations or other minor misdemeanors), is the subject of any pending criminal proceedings, or was the subject of any order, judgment or decree of any court enjoining such person from any activities associated with the offer or sale of securities.
    8. The annuities shall be sold to a limited class of investors. The issuer should define a limited class of investors that is consistent with its operations and is compatible with the structure and organization of the foundation.
    9. Provide a Consent to Service of Process, FORM U-2 appointing the Secretary of State to accept service of process.
    10. Provide a detailed explanation as to the calculations of the annuity payments.
    11. Issuer should provide a copy of the disclosure statement to be signed by donor. Disclosure statement should contain at a minimum, but not limited to:
      • All relevant risks;
      • The annuities are nonassignable;
      • Donor’s tax consequences;
      • A description of any other related material financial information of the issuer’s financial activities and operations that relate to its ability to pay annuity payments;
      • The following disclaimer: The payments made under a charitable gift annuity are backed by the full faith and credit of the organization and are not issued, insured or guaranteed by an insurance company or backed in any way by the State of Alabama;
      • All present, pending or threatened material legal proceedings, including those that are known to be contemplated by governmental authorities, administrative bodies, or other persons to which the issuer or its property is or may become a party;
      • Charitable gift annuities payout less than commercial annuities;
      • Donor should consult with accountant and/or legal advisor before establishing charitable gift annuity.
    12. Describe the method and manner in which the annuities are being sold including methods of solicitation and subscription.
    13. Provide a copy of any script that may be utilized during personal consultations with potential donors.
    14. Issuer should maintain a segregated account for its charitable gift annuities. The assets of the account should not be liable for any debts of the organization other than those incurred pursuant to the issuance of the charitable gift annuities. The general assets of the organization should be liable for annuity agreements to the extent that the segregated account is inadequate.
    15. Provide a draft of the offering circular or brochure to be used in connection with the charitable gift annuities.
    16. Provide the name and address of the custodian and the manager of the assets to be contributed.
    17. Provide a copy of the annuity agreement to be signed by donor and a representative of the charitable organization.  Annuity agreement should contain:
      • The value of the property or securities to be transferred to the charitable organization;
      • The amount of the annuity to be paid to the donor or other annuitant (annual amount);
      • The manner in which and the intervals at which payment is to be made;
      • The date of birth and gender of the person or persons during whose life payment is to be made;
      • The name and address of annuitant; and
      • The date that payments are to begin.
    18. The issuer’s audited financials should be provided that consist of:
      • Statements of assets and liabilities (balance sheet) for its three most recent fiscal years.
      • Statement of revenues and expenses (income statement) for its three most recent fiscal years.
      • Statement of cash flows for its three most recent fiscal years.
      • A description of any recent changes in its current accounting policies.
      • A copy of the report of the independent certified public accountant shall precede the financial statements.
      • Also, provide financial statements for the most recent quarter along with an attestation.
      • Financial statements should be submitted to the Commission annually.
    19. Provide a copy of investment parameters to be implemented for all contributed assets.
    20. Material changes to program should be submitted to the Commission prior to implementation.