Pooled Income Fund
As the name suggests, Sarah Lawrence accepts gifts from multiple donors into a fund and distributes its income to each donor, or another beneficiary, in proportion to his or her share. The pooled income fund is a favorable plan for those who want a current income tax deduction and want to secure an income for life that has the possibility for growth. The documents are easy to complete, and once established, additions can be made whenever you wish.
A gift to the pooled income fund allows you to:
- Provide lifetime income for yourself or a designated beneficiary
- Receive a charitable income tax deduction for a portion of the value of the gift
- Avoid capital gains tax if funded with appreciated securities
- Remove the assets used to fund the gift from your estate
Susan Williams, age 68, decides to contribute $50,000 to Sarah Lawrence's pooled income fund to support the library's book collection. Because of her age and the earnings of the fund, she is allowed a charitable deduction of about $25,726*. If each unit of the fund is valued at $100, she would own 500 units. Therefore, if the fund earns $5.00 per unit, she receives $2,500 in income that year.
*Based on discount rate of 6.2%