More and more nonprofits are taking a closer look at their gift annuity pool's health and having concerns about financial risk. What impact will increasing longevity of gift annuitants have on their nonprofit's financial condition? Gift annuity risk reinsurance can be a very effective way to manage risk for the nonprofit that seeks to offer charitable gift annuities. Reinsurance is simply a financing technique whereby a charity shifts its contractual life-income liability owed to the donor with annuity reinsurance. In this way, the nonprofit is able to shift both the investment risk — the risk that returns are less than had been originally expected over the annuity's life — and the longevity risk — the risk that the donor will live longer than expected.

© Mark Henry, JD