Pooled Income Fund

A pooled income fund gift is an easy way to receive income for life and make a generous gift to Bryn Mawr College at the same time.  A pooled income fund works like a mutual fund.  Your gift is combined with the gifts of all other donors to the fund and invested together.  You receive payments that reflect your share of the fund's net income.
  
A pooled income fund gift may be right for you if:

  • You want income payments for life
  • You want the possibility of income growth 
  • You want to save income taxes or capital gains taxes
  • You want to make a generous gift to Bryn Mawr
  • You are considering a gift amount of $10,000 or more

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Gifts pooled together
A pooled income fund functions like a mutual fund.  When you make a gift to the College's pooled income fund, your gift is combined with the gifts of all other donors to the fund.  All of these assets are invested together.  Each donor is assigned units in the fund that reflect her or his share of the fund's total assets.

Payments based on fund income
Each year, the pooled income fund distributes all of its net income to its participants.  The amount of income you receive is proportional to your share of the fund.  For example, if you have a 1/10th share of the fund and the fund earns $1,000 of net income, the fund will pay you $100.  Payments are made quarterly.

Your payments will vary in amount with the performance of the fund.  If the fund increases its net income rate, your payments will increase.  If it decreases its net income rate, your payments will decrease.

Who can receive payments?
You decide who will get the payments from your pooled income fund gift.  Usually, this will be you, or you and your spouse.  You can, however, select other individuals to receive the payments.  For example, you may wish to provide income for parents, a sibling, or a faithful employee. 

Tax benefits

  • Earn an income-tax charitable deduction
  • Avoid capital-gains tax
  • May reduce estate taxes and probate costs

You will receive a charitable income-tax deduction in the year of your gift.  If you cannot use the entire deduction that year, you may carry forward all of your unused deduction for up to five additional years. If you give appreciated securities to make your pooled income fund gift, you will not pay any capital gains tax when you make your gift.  In addition, the fund will not pay any capital gains tax when it sells these assets.  This means that the fund will be able to reinvest the full value of the assets you donate. By removing the gift assets from your estate, you may also reduce estate taxes and probate costs when your estate is settled.

Taxation of payments
The income you receive from our pooled income fund is fully taxable as ordinary income, as for interest income from a savings account. 

Remaining assets to Bryn Mawr College
When your pooled income fund gift ends, the value of your share of the fund will be removed from the fund and become available to support Bryn Mawr.

Add funds at any time
You can add to the pooled income fund at any time.  Additions earn an income tax deduction and will increase your future payments.

Assets to consider giving
The following assets make excellent sources for making a gift to our pooled income fund:

  • Cash that you currently have in a savings account, bank CD, money-market fund, or other safe but low-yielding investment
  • Securities, especially highly-appreciated securities

Example

Janice and Walter are in their early 80s. They have been modest but faithful supporters of Bryn Mawr College, having given $5,000 each year for many years. They would like to make a larger commitment, but are concerned about maintaining their income.

They own a $25,000 CD that will mature in a few weeks. They are pleased to discover that they can donate the $25,000 to our pooled income fund and continue to receive about the same amount of income from the pooled income fund as their CD was earning. Moreover, if the pooled fund investment portfolio increases in value, their income could increase in the future.

In addition to receiving income for life, they will:

  • Receive an immediate income tax charitable deduction of $15,083 for the value of their gift.
  • Make a generous legacy gift to Bryn Mawr.

 

The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.