As with other life income gifts, however, a higher income rate for the unitrust will generate a lower charitable deduction and will mean a smaller growth of the principal that ultimately goes to Wharton. Unitrust income is taxed to the donor based upon the trust's investments. This is the same type of gift vehicle as the unitrust except that the income payment is a fixed-dollar amount when the gift is established. Because the income will not vary, the annuity trust is attractive to donors seeking secure and stable future income. Pooled Income Funds Donors to Wharton can make gifts to the University's Pooled Income Fund, which operates similarly to mutual investment funds.
All income earned by the fund in each quarter is paid out to the participants, in pro rata shares.
The rate of return of the pooled income fund varies from quarter to quarter, depending on the earnings of the fund. Donors who contribute marketable appreciated securities to the pooled income fund will avoid capital gains tax on the transfer. As with Wharton's other life-income gifts, the income tax deduction for a gift to the Pooled Income Fund is a function of the donor's age and the fund's rate of return. The higher the income rate, the lower the deduction. A charitable lead trust holds an income-producing asset for a fixed term, or for the life of an individual, during which time income is paid to Wharton.