Calculating Gifts: George A. Huggins and the Conferences on Annuities, 1927-1959

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By: Ron Brown

The ABS Annuity Bond Campaign of 1919-1925

In June of 1919, his fourth month as Financial Secretary, Frank Mann was “all in” for the aggressive promotion of ABS Annuity Bonds.  The Ways and Means Committee minutes on June 19 record the initial elements of the world’s most successful and most influential gift annuity campaign, including some details of the Morse advertising proposal (which unfortunately has not been saved) that were amended by the committee or referred to the ABS Board for final approval. 

Promotion of Annuities:

Secretary Mann submitted a plan for increasing the sale of Annuity Bonds, prepared in accordance with the Committee’s request, by the Morse Advertising Agency.  This plan, in brief, provides for advertisements in various religious and secular papers calling attention to the Society’s Annuity Bonds and urging that persons write for booklets which will be specially prepared for the purpose.

A number of questions were raised in the plan, calling for the Committee’s consideration.  The following actions were taken:

1. It was decided that the Annuity Bonds should not be designated as Bible Bonds, but as Annuity Bonds of the American Bible Society.
2. It was decided that the Annuity Bonds be printed on paper and in typographical style that is conventional for securities of this nature, and that they be printed in denominations of $50, $100, $500, and $1,000, and in blank form to be filled in. 
3. It was decided to recommend to the [ABS] Board, That the rate of interest now employed by the Methodist Church be adopted on the Annuity Bonds of the American Bible Society.[1]  It was decided that it was unnecessary to secure the endorsements of banks and leading citizens.
4. It was decided that the wording of the Annuity Bond Certificate be prepared by the General Secretaries.
5. It was decided that the form of application blank, copy for advertisements, copy for circulars, papers to be used, and other similar matters be left with power to the General Secretaries.
6. It was decided that the designation of the annuities as Annuity Bonds of the American Bible Society, the wording of the Bond, and the rate of interest be referred to the Board for action after advice from counsel.

Gift annuity advertising and direct mail activities were launched in late summer of 1919.  In January of 1920, Secretary Mann reported that “since October 1, 1919, $29,600 had been received for annuity bonds.”   

Mann understood the need to secure financial resources adequate for an extended national campaign, as well as an administrative system to manage annuity revenues and expenses.  Anticipating many more gifts to come, Mann proposed a conservative gift annuity accounting and investment system, and a growth-oriented business plan:

1. The annuity funds shall be kept in a separate and distinct account and known as the “Annuity Account”.
2. All Annuity principals of living annuitants shall be kept intact and invested and known as “Trust Funds With Life Interest”.
3. There shall be established out of funds available by the death of an annuitant, an “Annuity Covering Fund”, which shall be kept always at least one and one-half times the amount of Trust Funds With Life Interest.[2]  The interest from the Trust Funds With Life Interest and from the Annuity Covering Fund shall be used to pay
   1. All annuity expenses.
   2. Five per cent on each annuity to be used for advertising and promoting the sale of annuities.
4. Any balance, of interest after paying the above two accounts, shall be put into the general fund of the Society.[3]  Any funds made available by the death of annuitants over and above the amount required for maintaining the Annuity Covering Fund, shall be used as directed by the Board or its appropriate Committees.

Members of the Ways and Means Committee were not convinced of the wisdom or practical expediency of approving advertising expenses based on a front-end load equal to 5% of the face value of annuity gifts received each year.  Instead, the committee approved use of a regular Advertising Account, with the understanding that the ABS Board would make “adjustments” for promotional expenses based on the value of annuity gifts received.

Nothing succeeds like success.  On April 20, 1920 Mann reported that from January through March, ABS issued 23 gift annuities with a face value of $47,434.  He projected astronomical fund raising results for the coming years; but even these proved too conservative:

If the present rate is maintained, the sales for the year will approximate $200,000, of which between 75 and 85 per cent will be returnable to the Society as net profit . . .  with a moderate effort in promoting the sale of these bonds, it will be easily possible for the Society to raise from $200,000 to $300,000 each year in this way.

In 1921 the ABS would receive 207 gift annuities with a face value of $268,856.56.  The face value of annuities grew to $321,021.38 in 1923 and reached $566,111 in 1925.  Under Mann’s proposed formula for spending 5% of the face value of new contracts, this would have provided an annuity advertising budget of $28,306 in 1926; the actual ABS annuity advertising budget was about half that amount.  

Immense success five years out was not readily apparent to Mann’s colleagues in the spring of 1920, when the country was experiencing a serious economic recession.  Mann pleaded for more money in April to advertise gift annuities and to hire additional staff.  Senior ABS leaders were beginning to recognize the scope of the opportunity.  Members of the committee agreed on a recommendation to the ABS Board:

That an amount equivalent to five per cent of each annuity sold be set aside for promotion purposes and that the said amount be taken from annuity funds made available by the death of annuitants; and, in case that is not sufficient, from the General Funds of the Society for an amount not to exceed $10,000 for the year 1920.  This money to be used in the discretion of the Executive Officers of the Society for the employment of suitable persons to promote the Campaign[4] and for the appropriate advertising of the bonds.

By September 27, 1920 the ABS had 127 annuity contracts under management with a face value of $507,394.  72 of these annuities had been funded since January, 1920.

On October 19, 1920 Secretary Mann presented his strategic plan for ABS fund raising, including its fledgling gift annuity program.  He proposed that extra attention be paid to investment strategies for the annuity reserve funds, and that all cash gifts be invested promptly.  He proposed to acquire new annuitants through advertising and sponsored articles in religious and secular papers, and in ABS’s own Bible Society Record; by direct mail; by producing specialized booklets on gift annuities; and by ensuring “Careful follow up of all inquiries.”[5]

Mann also presented an analysis of “the first 1100 inquiries received in response to the annuity advertising”:

This report had to do with sources from which the inquiries had come – the number received from each state and from foreign countries; the number received from men and from women, etc.  The bulk of the inquiries have been received as a result of advertising in the various papers.

The Ways and Means Committee duly authorized:

to continue the advertising program based on the returns of last year for the sum of $5000 which is within the provision made in the Budget for 1921.  Authorization was also given for experimenting with advertisements in popular weekly and monthly papers.

Examples of papers where ABS placed annuity ads include the Christian Herald, Moody Bible Institute Monthly, Presbyterian Magazine, World Outlook, and the Sunday School Times.[6]

On December 23, 1920 Mann gave the committee a draft letter to be used in a direct-mail gift annuity promotion targeted towards some of the Bible Society’s best donors and most loyal members:

Secretary Mann presented to the [Ways and Means] Committee a circular letter on the double letter-head advertising the Society’s annuities and entitled “Two Birds – One Stone”.  It is proposed in the early months of 1921 to send this letter out to Life Members and during the year to send it out to annuity prospects whose names were gathered from the Society’s records and other sources.

The Committee expressed its approval.[7]

In January 1923, Secretary Mann again pleaded “that it was important to carry the largest possible amount of advertising” in religious publications.  Members of the committee approved additional annuity ads to be paid through the annuity reserve fund ($4,000), the ABS general advertising fund ($2,500), and the ABS Church Promotion Fund ($2,500).  The committee considered but did not approve ads targeting bankers and attorneys.[8]

Frank Mann resigned as Financial Secretary in October, 1924 to become President of New York Guaranty Mortgage Company.  He continued to serve as a volunteer member of the Ways and Means Committee until at least 1930. 

After Mann’s departure it became clear that the annuity advertising campaign was not closely supervised.  Several of Mann’s orders for annuity advertising were inadvertently continued after he left the ABS staff.  The Ways and Means Committee fretted that the $7,500 appropriated for annuity expenses in 1924 had been overspent: $21,044 in annuity expenses were reported. 

Mann’s successor Arthur Ryan first proposed cutting the annuity advertising budget to zero for the remaining months of 1925, but that emotional reaction was temporary: on March 19, 1925 the Ways and Means Committee approved a budget of “not less than $15,000 and if possible $16,000 . . .  as the Budget for the Ways and Means part of the annuity program for the year 1925,” with money taken from the annuity fund rather than the general operating budget.  The minutes of April 23, 1925 reflect that “the new inquiries received and the money received on the annuity basis, would seem to indicate that this advertising has well paid for itself.”  Nevertheless, “In view of the Budget for the year 1925, the advertising for the remaining nine [sic] months will need to be greatly decreased.”    

By the time of the first Ways and Means Committee meeting after Frank Mann’s resignation, it was clear to all that Mann’s gift annuity campaign was succeeding beyond everyone’s wildest dreams.  The face value of the 342 new gift annuity contracts issued by the Bible Society between January 1 to November 20, 1924 totaled $413,233.  In the first 11 months of 1924 the Society had received 1,919 gift annuity inquiries.  The committee “was very gratified at this showing.”[9]

Results of the Annuity Bond campaign continued to outstrip all expectations.  At the January 1925 meeting, the Ways and Means Committee received a stellar report on fund raising results from ABS gift annuities in 1924.  The year-end volume of inquiries was astounding, resulting in a year-end total of 2,569 inquiries from prospective gift annuity donors:

The table below shows the results of the ABS gift annuity campaign from 1920-1930 as reported in its official history[10].  Here are some observations:  

1. The ABS advertising campaign produced an enormous number of gift annuity inquiries: 16,309 over 9 years.  This is all the more impressive considering that the population of the United States in 1920 was 106 million compared with 317 million in 2014.
2. Responding effectively to so many inquiries demanded a huge commitment of staff time and a well-managed administrative system.  The Bible Society was well-positioned to fulfill responses because of its pre-existing international, high-volume Bible sales system.
3. Issuing 4,615 gift annuity contracts based on 16,309 inquiries is an enviably high conversion rate of 28.3%.
4. Only nine gifts (0.2%) had a face value of $20,000 or more.  These nine gifts totaled $343,000 (7.9%) of the $4,439,204.30 received.  The face value of the average gift annuity was $961.91.  Average gift values were remarkably consistent from year to year.
5. While the number of gift annuities fell after the market crash in October 1929, the face value in 1930 was nearly equal to the previous year.

Mann’s departure marks the end of the first phase of the Bible Society’s gift annuity campaign.  The appointment of Arthur C. Ryan[11] in February 1925 signaled a clear change in direction.  Where Mann was a hard-charging, entrepreneurial marketer, Ryan’s focus was on sound administration.  Mann created a national advertising campaign from scratch; Ryan inherited a thriving gift annuity program, but one with inherent challenges.

Ryan’s political and organizational skills were soon tested by a crisis involving the very heart of the ABS gift annuity advertising campaign.  His responses to the crisis became fundamentally important in convening the first Conference on Annuities in 1927, and his death shortly after the Conference opened the door for a new era of national leadership by Dr. Gilbert S. Darlington.