A life income fund of a nonprofit organization resembles a sinking fund for the retirement of debt of a business enterprise.

Question

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A life income fund of a nonprofit organization is designed to provide income to a donor or designated beneficiaries for life, after which the assets typically revert to the nonprofit. A sinking fund for the retirement of debt is a method used by businesses to set aside money over time to repay debt or bonds, focusing on liability management rather than providing income to individuals.

A Life Income Fund of a Nonprofit Organization Resembles a Sinking