Charities that permit gift annuity donors to designate how the residua of their annuities will be used must adopt a method of tracking the values of each of their annuities. The Uniform Prudent Management of Institutional Funds Act (UPMIFA), which has been adopted in all states except Pennsylvania, imposes a legal requirement to use restricted gifts in accordance with the instructions specified by the donor. So for gift annuities, this means that if donors are allowed to designate or restrict the use of their gift annuity residua, the issuing charity has a legal obligation to track the market value of each gift annuity.
Even if a charity does not permit gift restrictions on its gift annuities, tracking gift annuity market values allows the charity to monitor the health of its gift annuity program on a gift-by-gift basis, as well as on a pool-wide basis. Gift-by-gift tracking of market values enables a charity to identify individual problem annuities and, once identified, to consider possibilities for ameliorating their negative effect on the performance of the gift annuity program overall.