The first great wave of life income gifts in America began in 1919, when the American Bible Society ran a gift annuity campaign based on mass advertising in national religious publications. The Society issued 4,615 gift annuity contracts from 1920 to 1930, when the U.S. population was 1/3 of its current size.
Encouraged by the success of ABS and other CGA campaigns, hundreds of churches, colleges, and social welfare organizations started gift annuity programs in the 1920s. For example, in 1926 the Art Institute of Chicago reported receiving gift annuities funded with $200,000 and $100,000 from Mrs. Anna L. Raymond. In 1927 a speaker noted America’s widespread embrace of gift annuities:
Today there are very few missionary societies, hospitals and other charitable organizations, colleges and theological seminaries, that are not active in securing sums of money on which annuities are paid.
Under the leadership of Dr. Alfred Williams Anthony (a descendant of Roger Williams, founder of Rhode Island), the Federal Council of Churches strongly encouraged its members to embrace charitable gift planning. In 1925, Anthony created a Committee on Financial and Fiduciary Matters, whose members represented leading national banks, insurance companies, and law firms as well as nonprofit organizations.
Through its Wise Public Giving Series of publications, the Committee encouraged charitable gifts through outright gifts, wills, trusts, annuities, and other methods. For example, in 1927 the Committee published a pamphlet encouraging the use of charitable life income trusts, now known as charitable remainder trusts, entitled Living Trusts: What They Are, What They Serve, Their Advantages. The pamphlet includes a sample life income trust agreement. Living trusts were said to be “good for those who wish an income for themselves or others without the responsibility of administering property.”
In presentations to the Trust Company Division of the American Bankers Association in 1925 and 1926, Anthony asked the financial community to support nonprofit gift planning programs. In 1926 the Bank of New York and Trust Company published a series of newspaper advertisements encouraging donors to make charitable gifts through their estate plans. Other BNY&T publications encouraged bankers and trust companies to use a legal document known as the Uniform Trust for Public Uses.1
The Equitable Life Assurance Society designated December 13–18, 1926, as Bequest Week: “A period in which to educate all its agents—nearly 10,000 in number, scattered all over this country—in soliciting life insurance which should ultimately benefit educational and missionary objects.” Princeton University and other colleges encouraged members of the graduating classes to take out life insurances policies benefitting their alma mater.
Most importantly, the Committee convened a series of local and national conferences involving trust banks, law firms, insurance underwriters, and charitable organizations. A conference for financial institutions, held in Atlantic City on March 22–24, 1927, called for emergency action to reduce the risks taken by many nonprofits in their new gift annuity programs. Quite a few nonprofit gift annuity programs employed unsafe practices such as competing for donors by bargaining over high payment rates or making annuity payments from current income rather than setting aside a dedicated reserve fund.
The Conference on Annuities held on April 29, 1927 introduced actuarial principles into gift annuity programs. Those principles revolutionized charitable gift planning.
1 Bank of New York and Trust Company materials courtesy of BNY Mellon Archives.
Gift Planning History 