New York Annuity News

Committee Acts to Protect Charitable Giving

U.S. Rep. Henry J. Hyde (R-IL), chairman of the House Judiciary Committee, said today that he will move quickly for House passage of legislation to protect charitable organizations from antitrust lawsuits.

On Wednesday, the Judiciary Committee completed work on H.R 1902, the Charitable Donation Antitrust Immunity Act of 1997, an amendment to a two-year-old law intended to protect the nation's charities from lawsuits.

In 1995, Congress learned of an assault on charitable donations waged in a class action lawsuit underway in Federal Court in Texas. Defendants in the case, a collection of charitable organizations including the Lutheran Church, the United Way, and Northwestern University, stood accused of violating antitrust laws by agreeing to use the same annuity rates when offering donors "charitable gift annuities."

Charitable gift annuities are a vehicle for charitable contributions. Typically, donors gives a non-profit charitable organization a sum of money. In return, the donor receives a charitable deduction, and the agreement of the charity to pay a fixed income for life. Depending of the annuity rate used, the value of the life income in relation to the total donation fluctuates.

Finding that there were strong public policy reasons to protect charitable organizations from antitrust suits, Congress enacted H.R. 2525, the Charitable Gift Annuity Antitrust Reform Act of 1995. That law specifies that it is not a violation of the antitrust laws for non-profit organizations to agree to use the same annuity rate when issuing charitable gift annuities. The expectation was that the '95 law would lead to dismissal of the class action suit and an end to the case, Hyde explained.

When the '95 law was asserted as a defense in the case, the judge denied the motion to dismiss, Hyde said. The court's rulings make it evident that in order to achieve the goal that Congress originally intended, the '95 law must be amended to clarify that all activity connected to the issuance of a charitable gift annuity is protected. Also, it should be clear that the Internal Revenue Service (IRS), not a district court, properly makes the determination of an instrument's status under the tax code.

In response, Hyde and U.S. Rep. John Conyers (D-MI) introduced H.R. 1902, the Charitable Donation Antitrust Immunity Act of 1997. H.R. 1902 provides antitrust protection for charitable gift annuities and charitable remainder trusts, and grants immunity to any person subject to suit for offering such an annuity or trust. It establishes a conclusive presumption that a particular instrument is a charitable gift annuity or charitable remainder trust if the donor has treated it as one in filings with the IRS, or the charity has treated it as one in documents provided to the donor, unless the IRS has ruled

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	Did You Know?
	A variable annuity has two phases: an accumulation phase and a payout phase. During the accumulation phase, you make purchase payments, which you can allocate to a number of investment options. For example, you could designate 40% of your purchase payments to a bond fund, 40% to a U.S. stock fund, and 20% to an international stock fund. The money you have allocated to each mutual fund investment option will increase or decrease over time, depending on the fund's performance.