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Pooled Income Fund
A pooled income fund is similar to a mutual fund. Donors may invest in the fund — essentially pooling their gift with gifts from other donors — through gifts of cash or securities. Each donor receives "shares" in the fund equivalent to the value of his/her gift in relation to the value of the fund at the time.
Assets in the fund are invested and reinvested in high quality stocks and bonds. All income earned is distributed to the fund's participants. Over time, the underlying value of the fund and the income to each donor has the potential to grow.
Gifts to the pooled income fund provide a charitable contribution deduction for income tax purposes. The amount of the deduction depends on the age of the donor and the applicable rate of return of the fund. If long-term appreciated securities are invested in the pooled income fund, there is no capital gains tax on the sale of such securities.
On the death of the income beneficiary, the value of his or her shares is withdrawn and used by Wake Forest for purposes previously designated by the donor.
EXAMPLE CALCULATION
Gift made by a couple age 60 with $25,000 in appreciated stock.
Gift to Wake Forest | $25,000 |
Annual income at 5% return
(Future income may vary.) | $1,250 |
Charitable income tax deduction | $4,929 |
Capital gains tax | $0 |
Estate taxes | reduced |
