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Annuity reserves are the assets a charity needs in order to finance its gift annuity payment obligations. The amount of reserves needed to finance each gift annuity depends on the size of the annuity payments, the ages of the annuitants, and the mortality table and interest rate used.
Many charities compute annuity reserves for their own internal purposes to make sure that they have ample funds on hand to make annuity payments now and in the future.
Some states that regulate gift annuities require charities that issue gift annuities in their state to submit annuity reserve reports annually. They do so to ensure that the charities are maintaining adequate reserves to finance their annuities.
