STAND. COM. REP. NO. 1291

Honolulu, Hawaii

, 2005

RE: S.B. No. 693

S.D. 1

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Consumer Protection & Commerce and Judiciary, to which was referred S.B. No. 693, S.D. 1, entitled:

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

beg leave to report as follows:

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

The Department of Commerce and Consumer Affairs, the State Attorney General, Hawaii Alliance of Nonprofit Organizations, and the Nature Conservancy submitted testimony in support of this measure. Myerberg, Shain and Associates submitted comments.

Your Committees find that during the 2004 legislative session, the Legislature amended the law controlling charitable gift annuities to decrease the minimum net worth requirements. This allowed relatively small Hawaii charities to take advantage of these annuities as a fundraising tool. The Legislature also made other adjustments in the law to protect the interests of consumers of these annuities.

However, after the law was enacted there was confusion as to whether calculation of the new minimum reserve requirements for charities would require costly actuary services. This measure simplifies the calculation of reserves by requiring that they be calculated in accordance with mortality table and discount rates to be determined by the Insurance Commissioner, rather than in accordance with accepted actuary standards. Your Committees find that this amendment will allow most charities to utilize commercially available software to calculate their reserves.

Your Committees have amended this measure by deleting the requirement that a nonprofit corporation conduct business in the State continuously for at least ten years before it may issue a charitable gift annuity, as this would put smaller charities at an unfair disadvantage.

As affirmed by the records of votes of the members of your Committees on Consumer Protection & Commerce and Judiciary that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 693, S.D. 1, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 693, S.D. 1, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection & Commerce and Judiciary,

 

____________________________

SYLVIA LUKE, Chair

____________________________

KENNETH HIRAKI, Chair