STAND. COM. REP. NO. 717

Honolulu, Hawaii

, 2005

RE: S.B. No. 693

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred S.B. No. 693 entitled:

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

begs leave to report as follows:

The purpose of this measure is to facilitate fundraising through the use of charitable gift annuities by clarifying and streamlining the requirements governing nonprofit organizations.

Testimony in support of this measure was received from the Attorney General, Department of Commerce and Consumer Affairs, Myerberg Shain and Associates, The Nature Conservancy, Hawaii Alliance of Nonprofit Organizations, Hawaii Community Foundation, Punahou School, American Heart Association, and five individuals.

Under current law, charities that issue charitable gift annuities must annually certify that their reserves on outstanding annuity agreements have been calculated in accordance with "accepted actuarial standards". This requirement has been interpreted by some charities to require that they incur the significant cost of actuarial services in order to calculate reserves, making the issuance of annuities difficult and impracticable.

This measure simplifies and streamlines the reserves calculation requirement by requiring that reserves be calculated in accordance with mortality tables and discount rates to be determined by the Insurance Commissioner, rather than in accordance with accepted actuarial standards. Your Committee finds that this amendment will allow most charities to utilize commercially available software to calculate their reserves.

Additionally, this measure:

(1) Clarifies that the business activities conducted by a qualified charity in the State shall be in the form of program services or fundraising, and shall have been undertaken "consecutively", rather than "continuously", for ten years;

(2) Clarifies that the filing deadline for a charity's annual compliance statement is March 15th of each year; and

(3) Provides that no surplus shall be required for any portion of a gift annuity that is reinsured by an authorized insurer.

Your Committee has amended this measure by deleting the proposed amendment to require a charity to have conducted business in this State consecutively, rather than continuously, for ten years. Your Committee also made technical, stylistic amendments to the measure.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 693, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 693, S.D. 1, and be placed on the calendar for Third Reading.

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

____________________________

RON MENOR, Chair