Measuring the effectiveness of a charitable gift annuity (CGA) program can be a challenging task. A wide variety of factors can contribute to or detract from a program’s success. From its inception date and the longevity of its gifts to its marketing and promotion, every CGA program has its own story. Evaluating your program can help you understand its past performance and, more importantly, provide the details needed to pave an effective path forward.
When evaluating your CGA program, it is important to remember that both internal and external factors influence its performance. Support from leadership for promoting life income gifts is an example of an internal factor, while the timing of existing CGAs entering the program is an example of an external factor. Knowing which is which will help you gain a deeper understanding of what has contributed most to your analysis.
While researching your existing gifts and those that have matured can be challenging, it is certainly not impossible. Most of the necessary information can be obtained from finance or development office teams or from your existing files. When staff attrition or incomplete files create difficulty, lean on your financial or administrative service provider for institutional archives that can often help bridge any historical data gaps.
Internal considerations
Program establishment
Consider the circumstances under which the program was first launched. Is it an older program with gifts issued at higher rates, or a newer program with more gifts issued at lower rates? Is there an appropriate gift acceptance policy in place, and if so, does it appear to have been consistently followed?
Gift activity
Consider the historical pattern of gift donations. Has there been a continuous flow of gifts, or have CGAs waxed and waned? A gift-by-gift analysis can reveal attributes of repeat donors, donors who make deferred gifts and even periods of successful marketing efforts. This can be especially helpful for professionals who are inheriting an existing program. Development teams can fine-tune their efforts based on past interest and the popularity of new gifts.
Program resources and support
Consider the human resourcing around the program. Have staff expertise, leadership support and marketing efforts remained consistent and aligned with best practices?
Finance and development partnership
Consider the relationship between the finance and development offices. Do they regularly monitor and review the pool’s performance and administrative processes? Successful programs have teams from both offices who are engaged and communicative.
A gift-by-gift analysis of longevity, experience and liability-to-funding levels can provide valuable insights to both groups. The resulting discussions often bring the program’s history to life and provide a unified understanding of its current state.
External considerations
Investment experience
Consider the asset holdings, allocation and markets in relation to the states where your program is registered. Is the investment policy delivering performance returns in line with your investment goals? Has your investment manager remained aware of changes to the CGA program’s ongoing liabilities?
Gift timing
Consider the level of activity during both market downturns and periods of growth. Was gift activity steady or variable during these times? This factor is often the least controllable but the most impactful.
Life expectancy
Consider how the asset was invested during its time in the gift annuity account. The American Council of Gift Annuities’ (ACGA) recommendations assume that 50% of the original gift amount will remain at the gift’s actuarial life expectancy. When it comes to life expectancy, some annuitants pass away earlier than expected, while many live beyond it. Has your program experienced one scenario more than the other?
Donor demographics
Consider the concentration of donors. What are the key characteristics (e.g., age, gender, etc.) of your donor base? Is your organization’s mission attracting new CGA donors, or is it becoming an increasing challenge?
Knowledge is Power
Whether you continue to lead a CGA program that you helped start, have inherited an existing program at a new workplace or are interested in revitalizing a dormant program, evaluating its success will provide a better understanding of the program’s history. This, in turn, can serve as an important guide in determining the best next steps for your program.
Just as no two CGA programs have an identical story, the same can be said for the evaluation process. Measuring the effectiveness of your program can be a unique challenge, but the PNC Planned Giving Solutions Group can help you understand the many intertwined factors contributing to its performance. We can help guide and facilitate the conversation whether you are:
- Seeking better stewardship for existing donors
- Engaging leadership to justify the program
- Uncovering liabilities and risks
- Investing in the growth of the program
- Researching past gift experience to revisit your existing processes and gift acceptance policy
ACGA assumptions in setting suggested maximum rate schedules
- A 50% target residuum, with the present value of the residuum being at least 20% of the original gift.
- An ACGA commissioned study indicated that a 45-55 blend of the 2012 IAR male and female mortality rates was most appropriate.[1]
- Annual expenses for investment and
- The gross total annual return on gift annuity reserves is 5.75%.
- Annual payments are made in quarterly installments at the end of each period.
Source: ACGA
Nonprofit Strategy & Solutions Group
PNC’s Nonprofit Strategy & Solutions group serves as a dedicated partner committed to empowering nonprofit organizations to achieve their missions. By combining national expertise with local knowledge, we provide comprehensive education and advice on governance, philanthropy, and financial sustainability — going beyond asset management to deliver actionable insights that address the most pressing challenges nonprofits face. With our deep community ties, practical nonprofit leadership experience and strong local market presence, we provide meaningful solutions that optimize resources and deliver a sustainable impact.
For more information, contact the team at IAMNonprofitStrategy@pnc.com.
