POOLED INCOME FUND
If you are interested in the tax-saving benefits of a charitable
trust, but would also like to minimize investment risk and investment
overhead costs by pooling your assets together with other investors,
the Pooled Income Fund accomplishes these objectives quite well.
Your gift to a Pooled Income Fund results in life income for
you. You will also receive an immediate income tax deduction for
a portion of the gift. There is no capital gains tax on your gift
of an appreciated asset. Finally, even though you receive income
for life, there is no estate tax due on this gift.
Your gift to the Pooled Income Fund combines gifts from many
members of the community to create a common investment portfolio
and operates much like a mutual fund. Your gift is invested and
100% of the net income is distributed in proportionate shares
to you, or to those whom you designate.
When you pass on, your shares will be donated to support a field-of-interest
you designate, an existing fund at the Foundation, or the Foundation's
discretionary endowment. Because local needs change, many people
prefer to leave it to the discretion of the Foundation to direct
grants to purposes that best address current community needs.
Such unrestricted funds will enable the Foundation's Board to
apply the funds you leave to the needs and opportunities of the
community as they change over time.
Major Benefits
The Pooled Income Fund is comprised of many donors.
Upon the transfer of highly appreciated, low-yield assets to
the pooled fund, you enjoy three major benefits: 1) bypass of
capital gains tax; 2) increased income; and 3) charitable tax
deduction.
All of the assets transferred to the fund are mingled together
and invested, operating like a mutual fund. This permits the fund
to acquire a diversified portfolio of investments and allows all
participants to receive your fair share of the investment earnings.
After the investment earnings have been distributed for the life
of the donor(s), the principal is then transferred to charity.
This transfer includes an additional saving on both probate cost
and estate taxes.
A gift to the Pooled Income Fund is as easy to complete as opening
up a checking account. There is very little legal work involved,
especially compared to an individual charitable trust. Also, there
is no separate tax return to prepare.
A contribution to the Pooled Income Fund can provide income for
life to you and/or others you name. You can realize income tax
savings currently and potential estate tax savings later. The
Pooled Income Fund benefits from professional management and investment
diversification. Contributions to the Pooled Income Fund may enable
many participants to increase income over your present investments
The typical donor:
- Needs variable income for life.
- Seeks income that is market sensitive.
- May participate in different pooled income accounts for varied
needs.
- Is between the ages of 55 and 80.
Gift features and benefits:
- Income for life, market sensitive
- Mutual fund approach to a charitable trust
- Reinvestment of assets transferred to the trust
- Trust Company manages the fund
How Do I Make a Gift Using a Pooled
Income Fund?
After cash or marketable securities are transferred to the Trust,
these assets are pooled, reinvested, and managed with other donors'
assets to leverage investment performance. A percentage share
of the income earned in the fund is paid to the donor or the income
beneficiaries that the donor chooses. When the income beneficiaries
die, the remaining assets in your portion of that fund are transferred
to the Foundation.
Other Facts You Should Know about a
Pooled Income Fund
The income tax deduction donors receive when giving through a
pooled income fund is based on an Internal Revenue Service formula
that considers age, the ages of other income beneficiaries, the
projected assumed payout of the fund, and a federal index rate.
The older the donor is at the time the pooled income gift is made,
the larger the income tax deduction based on the amount of gift
transferred.
The trust provisions the donor has control
of when giving through a pooled income fund include:
- Naming the income beneficiaries.
- Choosing the charitable remainder beneficiaries.
- Selecting the frequency of income payments.
Also see Frequently Asked
Questions About Pooled Income Funds
