Pooled Income Fund

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Pooled Income Fund

A mutual fund comprising of donated securities and/or cash, the proceeds of which go to charity and donors. One donates securities and cash to create a pooled income fund, which is then invested as if it were a regular mutual fund, which pays dividends to donors each quarter in proportion to the amount donated as a percentage of the whole fund. When a donor dies, what remains of his/her donation as a percentage of the total fund is given to a charity. Usually charities administer pooled income funds, and the remaining donation goes to their own charitable operations. All cash and securities donated to pooled income funds qualify as charitable gifts for tax purposes; importantly, securities so donated are exempt from capital gains tax.
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References in periodicals archive ?
Created in 1969 under Section 642(c) of the Internal Revenue Code, pooled income funds are similar to charitable remainder trusts in that they provide lifetime income for the donor, with the remainder of the fund going to the designated charity when the last beneficiary dies.
Elizabeth Finch, manager of gift planning at the Natural Resources Defense Council (NRDC), breaks it down into three simplified categories: charitable gift annuities, pooled income funds and trusts.
Other types of deferred gifts include pooled income funds and charitable gift annuities.
These planned gifts include pooled income funds, charitable remainder annuity trusts and unitrusts.
The estimated total of 238,293 DAF accounts in 2014 compared with the combined estimated total of 190,447 for private foundations, unitrusts, annuity trusts, lead trusts and pooled income funds. Among these other vehicles, only the number of private foundations experienced growth last year, rising by 3% to 82,045.
Pooled income funds are the least common type of split-interest trust, with 1,402 returns filed in 2011 (Figure A).
Three types of split-interest trusts are sanctioned by the Internal Revenue Code, so the interest passing to the charitable organizations qualifies for the charitable deduction for income, gift, and/or estate tax purposes--charitable remainder trusts, pooled income funds, and charitable lead trusts.
Charitable gift annuities providing income as a general obligation of the charity and pooled income funds providing income from co-mingled investments - see page 373.
Planning Point: This change impacts charitable remainder trusts, charitable lead trusts, and pooled income funds. It remains to be seen whether Treasury will create a new form for split-interest charitable trusts or continue to use Form 1041-A.
To attract younger donors, Houston and her colleagues developed a creative approach to marketing pooled income funds that were not experiencing much activity at the time "What we decided to do was to look at our pooled income fund for growth and find away to make that appealing to younger individuals," said Houston.
There are, among other charitable vehicles, public charities, private foundations, private operating foundations, supporting foundations, pooled income funds, donor-advised funds, and others.
The firm's seminars were geared towards educating executive directors and board members about marketing endowments and the different options donors have, such as charitable remainder and lead trusts, pooled income funds and charitable gift annuities.