FASB liability calculations for flexible gift annuities
The method for computing FASB liabilities for flexible gift annuities (FGAs) depends on whether or not the annuitant has elected an annuity starting date as of the liability valuation date. If the annuitant has elected a date of first payment as of this date, the liability calculation is the same as it is for a standard deferred gift annuity with the same date of first payment and annuity rate. GiftWrap can perform this liability calculation correctly as long as the elected date of first payment and the annuity rate that goes with it are entered in the Gift Information screen for the gift.
If the annuitant has not elected a date of first payment as of this date, the FASB liability equals the highest liability calculated among all of the elective combinations of date of first payment and annuity rate. The way to determine the FASB liability for a flexible gift annuity with absolute certainty is to compute the liability for a deferred gift annuity based on each elective payment start date/rate pair and determine the greatest liability among the results. In many cases, the earliest date of first payment and annuity rate will result in the greatest liability.
You can set up all FGAs that do not have a date of first payment elected so that their FASB liabilities are based on the earliest date of first payment and annuity rate that follows the date of valuation for the liablilities. To do this, choose Compliance click the Flexible DGA button at the top of the Gift Information screen for the gift.
All of a flexible gift annuity's elective payment start dates and associated payment rates may be stored in the Flexible GA Details tab on the Gift Information screen. To perform a FASB liability calculation for any date/rate pair, you may copy them from this tab to the First Payment Date and Payout % fields in the General tab on the Gift Information screen.
If your charity's flexible gift annuities where the annuitant has not yet elected a date of first payment represent only a small fraction of your total pool of annuities, it may be sufficient to enter the earliest date of first payment and annuity rate in the General tab of the Gift Information screen for each of them and run your FASB Liability report based on that data. If these flexible gift annuities represent more than a small fraction of your total pool of annuities, you should consider computing the FASB Liability for the largest of them based on all possible combinations of date of first payment and annuity rate. Then, enter the combination that yields the greatest liability for each gift as the date of first payment and annuity rate in the General tab of the gift's Gift Information screen. When done adjusting these values for these flexible gift annuities, run the FASB Liability report. You need to re-evaluate these flexible gift annuities annually, as the date of first payment and annuity rate with the greatest minimum liability can change over time.
You can indicate whether or not an annuitant of a flexible gift annuity has elected a date of first payment using the Payment Date Elected check box on the Details tab of the Gift information screen for the gift.
Custom filter to list all FGAs where the annuitant has not elected a date of first payment:
Gift.subtypeid = 8 AND gift.paymentdateelected = 0
Custom filter to exclude only FGAs where the annuitant has not elected a date of first payment:
Gift.subtypeid <> 8 OR gift.paymentdateelected = 1