6.2 Gift Annuity Program Parameters

EFFECTIVE: 6/21/2012 · REVISED: 7/1/2022

Introduction

The treasurer or the appropriate committee of the University of Tennessee Foundation’s (UTFI) governing board must approve any exceptions to the parameters in advance.

• The minimum dollar contribution required to set up a gift annuity will be $25,000.
• The UTFI will follow the rates (payout percentages) suggested by the American Council on Gift Annuities but donors may choose a lower payout.
• The minimum age for annuitants at the time annuity payments commence shall be 60.
• The UTFI will offer the four types of gift annuities – Immediate, Deferred, College Annuity and Flexible Deferred.
• Payout frequency will be quarterly.
• Quarterly payments will follow the calendar year with payouts made on the last day of March, June, September and December.
• If a donor makes a gift after, the 10th of the payment month (March, June, Sept, Dec), then he or she will receive the partial payment with the first regular payment for the next quarter.
• The Board of Directors has determined the gift annuity reserve is adequately funded; therefore, effective July 1, 2022, at the termination of a Gift Annuity and after all income payments have been met, 4.5% of the residuum will be added to the reserve fund, and 95.5% of the residuum will be used as directed by the donor.
• Donors may designate a gift annuity to create a named endowment but original funding of the gift annuity should be three times the amount currently required to create a named endowment. For example, a current $25,000 naming opportunity would require the gift annuity be funded with $75,000. The American Council on Gift Annuity rates has an underlying assumption that the residuum at the termination of a contract will be 50% of the original contribution. This assumption is based on life expectancies, expenses for administering the gift annuity and annual total returns. It is important to note that historically many gift annuity programs have a residuum more in the 70-90% range because of above average investment returns.
• Donors who choose to make a gift annuity under $75,000 will be advised that if in the event at the termination of the contract there is sufficient residuum because of favorable investment returns a named endowment will be created. If not, then the monies will be given to the campus, college, institute, department or program designated by the donor. The donor may designate the monies be added to an existing endowment or used at the discretion of the administrator in charge of the designated area.
• All gift annuity agreements must be reviewed in advance of presentation to the donor(s), by the Assistant Vice President for Planned Giving, who may elect to forward on to UTFI General Counsel and/or BNY Mellon for additional review.
• The president or treasurer of UTFI will sign all gift annuity contracts.