Pooled Income Fund
A Gift that Offers a Variable Payout Rate
The pooled income fund works more like a mutual fund, whereby your gift is unitized and "pooled" with others. Your annual income is the "pro rata" share of the overall pooled income yield for the year, paid in quarterly installments. The rate of return will fluctuate according to economic conditions and the fund's investment strategy. Recently, the fund paid an annual return of approximately 3.5%.
A minimum gift of $25,000 is required.
There are several advantages that the pooled income fund gift vehicle has over the charitable gift annuity.
First, it is a great instrument for donors who do not have fixed-income obligations, and have the luxury of "riding the market" over a long period of time. Consequently, the remainder interest, or what ultimately comes to Carnegie Mellon, is a larger contribution than it would have been with a higher, fixed-payout rate.
Second, since only interest and dividends are paid out quarterly, a donor with highly appreciated stock would be able to shield the entire gain by establishing a pooled income fund. As in the other life income plans, a donor receives a partial tax deduction based on the present value of the remainder interest. This figure is determined by the age of the beneficiary and the payout rate of the fund.
Also, unlike the charitable gift annuity, once a donor makes the initial gift, additions of $2,500 or more may be added to the fund at any time.
Here are examples of the benefits of a pooled income fund gift for a single beneficiary based on a $25,000 gift.
||Annual Income||Charitable Deduction|
|55||$750 (3.0% of $25,000)||$10,168|
|65||$750 (3.0% of $25,000)||$13,307|
|75||$750 (3.0% of $25,000)||$16,636
|85||$750 (3.0% of $25,000)||$19,770|
Please contact Christine Tebes to learn more about pooled income funds.