Pooled Income Fund

Some large charitable organizations create Pooled Income Funds (PIFs), which are trusts that administer contributions from many donors. A PIF works somewhat like a mutual fund in administering funds for multiple donors. The donor gives cash or securities to the PIF, which invests the assets. The PIF distributes income to the donor or other income beneficiary and the remaining assets to a charity at a specified time.

• The PIF donor (income beneficiary) gets tax benefits and variable, market-sensitive income for a term of years or life. The donor, who is usually 55–80 years old, may participate in several PIF accounts.
  
• The charity (remainder beneficiary) gets the remaining assets in the donor’s portion of the fund when the term ends or the donor dies.
  
• The donor’s heirs get nothing from the PIF unless the donor designated them as income beneficiaries.*
  
  
  

*If the donor wants to replace all or part of the inheritance that his or her heirs “lose” to the charity in a CRT, CGA, or PIF, the donor can use part of the income from the trust, annuity, or PIF income to purchase a life insurance policy that names the heirs as beneficiaries.