Planning Your Gifts
Pooled Income Fund Offers Flexible Income
Suppose you would like to make a gift that provides income, but you prefer an income that can fluctuate over time with prevailing interest and dividend rates. In this case, you might want to consider The University of Alabama Pooled Income Fund. Like the charitable gift annuity, participation in the UA Pooled Income Fund can begin with a contribution of $10,000 or more.
Under the terms of the Pooled Income Fund, a number of donors make contributions to a common fund (structured as a separate trust). The funds are invested for a balanced return of income and growth over time. Each year a pro rata share of the earnings of the trust is returned to each participant.
As in the case of a charitable gift annuity, an immediate income tax charitable deduction is allowed for a portion of the value of the cash or other assets contributed to the Pooled Income Fund. Capital gain tax that would be due on a sale of appreciated assets contributed to the Pooled Income Fund may be entirely avoided. Assets used to fund your Pooled Income Fund contribution can also be removed from your estate for federal tax purposes.
For example: Carl and Marjorie, ages 67 and 64, have planned to make a significant gift to The University as part of their long-range financial and estate plans. They are intrigued by the possibilities of The University of Alabama Pooled Income Fund and decide to make a series of $10,000 contributions to the fund for this year and the next several years. They will enjoy a deduction of over $3,600 for their gift this year. They expect to receive income in the range of 5% that can rise or fall with prevailing economic conditions. Over time it is also hoped there will be growth in the assets in the fund. This should also result in an increased income in future years.
- Amount transferred to pooled fund - $10,000
- Estimated annual payments - $500
- Immediate income tax charitable deduction - $3,640
- Amount of payments and deduction will vary