A pooled income fund is similar to a mutual fund. The fund combines gifts from many donors for investment purposes, and pays earnings to donors based on the number of units their gift represents, similar to a mutual fund. Your gift is irrevocable, but you will receive income for the rest of your life, or the life of a surviving beneficiary, if you so desire. You receive additional tax benefits if you donate appreciated securities to the pooled income fund because no gain on the securities is taxable to you. Often the current yield from dividends of growth stocks is low.
Donors can increase their income by donating their securities to the pooled income fund.
Because the fund is tax exempt, the trustee can sell the securities without incurring capital gains tax, investing the full proceeds in higher yielding instruments. Charitable Remainder Trusts - Donors can increase the return on their investment while maintaining control over their assets by establishing a Charitable Remainder Trust. There are two types of Charitable Remainder Trusts, an annuity trust and a unitrust. An annuity trust pays a fixed amount each year regardless of the fluctuation in the fair market value of the trust's assets. A unitrust pays a fixed percentage of the trust's assets as re-valued each year.