STAND. COM. REP. NO. 975-04

Honolulu, Hawaii

, 2004

RE: S.B. No. 3049

S.D. 2

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 3049, S.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO CHARITABLE ANNUITIES,"

begs leave to report as follows:

The purpose of this bill is to allow more of Hawaii's charitable organizations to raise funds through the issuance of charitable gift annuities, under which an annuity is provided to the donor, by modifying net worth and reserve requirements under the State's insurance laws for organizations that issue these annuities.

Specifically, this bill:

(1) Reduces the minimum organization net worth requirement from $5,000,000 to $100,000;

(2) Replaces the current requirement that separate annuity funds equal to at least one-half of the value of the annuity be maintained, with the requirement that the organization maintain segregated assets in a Hawaii institution equal to the sum of the reserves on its outstanding annuity agreements, calculated in accordance with accepted actuarial standards, plus the larger of $100,000 or ten percent of the reserves; and

(3) Provides that an organization issuing charitable gift annuities:

(A) Must have conducted business in Hawaii continuously for at least ten years;

(B) File an annual statement of compliance with the Department of Commerce and Consumer Affairs (DCCA); and

(C) Prominently disclose in writing that the gift annuity is not insurance, is not subject to regulation by the DCCA Insurance Division, and is not protected by any state guaranty fund.

Your Committee finds that current $5,000,000 net worth requirement precludes smaller local nonprofit organizations from using charitable gift annuity agreements as a fundraising tool. This bill will enable more of Hawaii's grassroots nonprofit organizations to enter into charitable gift annuity agreements and encourage more citizens to donate to these organizations, while protecting donors.

Your Committee has amended this measure by:

(1) Changing its effective date to July 1, 2099, to promote further discussion by interested parties;

(2) Deleting the requirement that the segregated assets be maintained within this State, to give charitable organizations the flexibility to maximize returns, which will ultimately be returned to the community in the form of charitable services; and

(3) Making technical, nonsubstantive amendments for clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3049, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3049, S.D. 2, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,

 

____________________________

KENNETH T. HIRAKI, Chair