The Office of General Counsel issued the following opinion on October 22, 2003, representing the position of the New York State Insurance Department.

Re: Charitable Gift Annuities, Acceptable Consideration

Question Presented:

What is the basis of the Department’s position that real property may not serve as consideration for a charitable gift annuity?


The Department’s position is based upon the language of New York Insurance Law § 1110(a) (McKinney 2000).


No facts are presented.


New York Insurance Law § 1110(a) provides:

The superintendent may, in his discretion, issue a special permit to make annuity agreements with donors to any duly organized domestic or foreign non-stock corporation or association conducted without profit and engaged in active operation for at least ten years prior thereto solely in bona fide charitable, religious, missionary, educational or philanthropic activities. The permit shall authorize such corporation or association to receive gifts of money conditioned upon, or in return for, its agreement to pay an annuity to the donor, or his nominee, and to make and carry out such annuity agreement. Every such corporation or association shall, before making such agreement, file with the superintendent copies of its forms of agreements with annuitants and a schedule of its maximum annuity rates, which shall be computed on the basis of the annuity standard adopted by it for calculating its reserves so as to return to it upon the annuitant's death a residue at least equal to one-half the original gift or other consideration for such annuity. (emphasis added).

For purposes of construing New York Insurance Law § 1110(a), the current meaning of "money" must control. New York Uniform Commercial Code §1-201(24) (McKinney 1993 and 2002 Supplement) defines money as "a medium of exchange authorized or adopted by a domestic or foreign government as part of its currency." In modern operations, of course, money does not only include cash but also drafts and checks.

In keeping with the language of the last sentence of New York Insurance Law § 1110(a), which speaks of "other consideration", the Department has permitted the donation of readily marketable securities which are capable of disposal on the date of transfer at a readily determinable price. The Department’s view is that real property does not have sufficient objective indicia of ready marketability to serve as consideration for a charitable gift annuity. This position would not preclude a donor from selling real property and immediately transferring the sales proceeds to a qualified organization in exchange for a charitable gift annuity.

For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.