Marketing Strategies for the ACGA Rate Change

The American Council on Gift Annuities (ACGA) just released its new recommended gift annuity rates, effective July 1, 2018. In general, the rates will increase by .3% to .5%. For a look at the rates and PG Calc’s analysis of the change, read our recent blog post.

Changes in the ACGA suggested rates, up or down, create the chance for communication with current annuity donors and those considering a gift annuity. The current rate increase certainly offers opportunities for additional annuities from existing annuitants. But more importantly, the rate increase will likely motivate others considering an annuity to make their first gift. This means increased diversification of your pool, thereby reducing your long-term risk.

Strategies for Communicating the Rate Increase

While the rates are not effective until July 1, now is the time to inform your donors of the impending rate increase. Anyone who has a gift annuity program should repurpose existing CGA marketing mailings as the starting point – no need to recreate the wheel. It’s important to promote the sense of urgency now because charities need to build up demand. By the time the rates become effective, it will be summer and donors will have other priorities. Therefore, the strategy should be a one-two punch; tell them about this now so they can start planning, and then again in July. Here are some quick ways to communicate the news. Which one(s) you use will be a question of your existing marketing plan and your time.

  • This is certainly newsworthy information that at minimum should be posted on your social media. Update your website, and Facebook and Twitter accounts, to announce the impending rate increase.
  • Send a postcard with the rate table and timing.
  • Mail a short letter to your prospects with the new rate change, and a reply card requesting a personalized illustration.
  • Email your prospects, also with a rate table and a link to your gift calculator, so they can run their own personalized illustration.
  • Advertise in your charity’s publications (print or digital). Even if your publications don’t normally mention philanthropy, this rate increase justifies a one-time exception.

It comes as no surprise that the best prospects for new annuities are those with existing annuities. Stewardship at this time is important. Send your annuitants a personalized letter showing them their current annuity rate and the annuity rate and payments to which they will be entitled under the new recommendations. If you have a large annuity program, we can help produce customized letters with new and old rates.

Your marketing campaign should continue past July touting the message, “Important Update: Gift Annuity Rates Have Increased.” This will be newsworthy for the rest of 2018. Mid- August into September is a good time to market to gift annuity prospects in order to close the gift before year end.

Prospecting for Gift Annuities

While marketing is important, don’t forget to review your own portfolio of assigned prospects and consider their age, relationship to your charity, and giving capacity. The most common gift minimum according to the ACGA survey is $10,000, presenting a low barrier for a prospect to “try out” gift annuities. Prospects expressing concerns over market volatility, outliving their resources, and increasing spendable income are likely to consider an annuity, especially at the more attractive rates. Donors who have said, “I wish I could do more” are good gift annuity prospects. While gift annuities should never be marketed as financial instruments, the ACGA 2018 rates are now more attractive to prospects.

What Does It All Mean?

Every charity offering gift annuities should plan a communication and marketing campaign to target likely gift annuity donors. Place as many impressions of this message in front of your prospects as you can this year. By next year, the rate increase will be old news.

The ACGA 2018 rate change will likely increase interest and gift annuity activity. It is important to consider how the increase in rates may influence the investment allocation of gift annuity reserves. Now is an opportune time to consider the risk profile, investment style, and actual mortality of each charity’s gift annuity reserve fund.

Lastly, charities have to ensure compliance is met in the heavily regulated states with the permissible rates you can offer and when (as discussed in our recent blog post).