CFP

Charitable Transfers - Pooled Income Funds

Pooled Income Funds
A pooled income fund is very similar to a charitable remainder mutual fund. With a pooled income fund, a trust is established at a public charity and donor contributions are comingled or "pooled" together, and then invested within the fund. The donors are assigned "participation units" based on the amount of their donation.

Why "Participation Units?"
The investment income generated each year is distributed out to all of the active donors or those that own "participation units." If more donations are added to the pooled income fund, then the donor receives more "participation units." When the donor dies, their "participation units" are dissolved and the principal then goes to the charity.

Tax Deduction?
Donors can transfer highly appreciated securities to the pooled fund as well to avoid the capital gains tax. Contributions pooled to income funds qualify for charitable income, gift and estate tax deduction purposes. The remaining interest is discounted to the present value to determine the donor's deduction amount.



comments powered by Disqus
Trading Center