The Smarter Giving Guy » stinky

Stinky charitable gift annuity advertising – more

SG Guy — Sun, 03 Oct 2010 20:20:10 +0000

We’ve raised concerns about the advertising approaches used in the sale of charitable gift annuities. Our biggest beef has been the trumpeting of what appear to be big “returns” — when in fact the returns are largely a return of principal. Read our April 2009 post on this.

As an example of a more forthright disclosure, a recent advertisement for a commercial (not charitable) annuity lists “current payout rates” and then provides a prominent explanation that

“Payout rate is the percentage of purchase price paid out each year and includes both interest and return of principal.”

Come on, charities. You’re supposed to the good guys. Surely you can provide disclosure as good as a commercial annuity offer.

Stinky Charitable Annuity Advertising Pulled

SG Guy — Wed, 21 Oct 2009 23:21:23 +0000

In a September 30 posting, I told you about a Forbes.com story revealing more questionable charitable gift annuity advertising.

Forbes.com now reports that charities using the advertising message (which included units of the University of California and United Way Worldwide) have been revising or pulling the ads. Read the new Forbes.com story.

Thank you, Forbes.com, for bringing this stinky practice to light. There’s still work to be done — see our April posting Charitable Gift Annuity Advertising Stinks on charitable annuity advertising of “returns” and “rates of return.”

Come on charities, you’re supposed to be the good guys. You can do better.

More Stinky Charitable Gift Annuity Advertising

SG Guy — Thu, 01 Oct 2009 02:46:35 +0000

Back in April, when we wrote that Charitable Gift Annuity Advertising Stinks, we shared our concern that charities were not being forthright in the way they described the “return” on their charitable gift annuities.

Now Forbes.com reveals more questionable charitable gift annuity advertising.

We said back in April, “Come on, charities. . . . You’re supposed to be the good guys. Surely you can do better.” We say it again.

Charitable Gift Annuity Advertising Stinks

SG Guy — Thu, 23 Apr 2009 17:06:11 +0000

A big ad offering “Returns as high as 11.5% and possibly more when you factor in tax advantages” from a well-known charity is likely to get your attention — especially when you can’t get 3.0% investing your money in bank CDs. I came across such an attention-getting ad in yesterday’s (April 22) New York Times business section. Unfortunately, this ad stinks!

The ad offers charitable gift annuities. I won’t single out this charity, because many others follow a similar approach.

Don’t get me wrong. Charitable gift annuities can be a terrific way to donate to a charity you care about, while getting back income during your lifetime.

What’s my problem? It’s the way this and similar ads sell charitable gift annuities by trumpeting a big “return” or “rate of return.”

In common language, a return is money you gain (or lose) in relation to the money you invest; a rate of return is the percentage of gain (or loss).
If you put $1,000 in a simple-interest 2.5% CD, at the end of the year the bank would pay you $25 (interest) plus your $1,000 (your principal). Your return would be $25 and your rate of return would be 2.5%.
With a charitable gift annuity, however, you’ve given away your principal. If you’re 90 or older, the charity that published the ad would pay you $115 at the end of the year (maybe a little interest, but mostly paying back your principal). Calling that an 11.5% return is either confusing or misleading, or both.

Come on, charities. This “return” disclosure approach, which many of you use, stinks. You’re supposed to be the good guys. Surely you can do better.