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 itemize your tax deductions and want to save income taxes
  • You want to avoid recognition of capital gain taxes on gifts of appreciated securities to the fund
  • 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. The fund makes payments quarterly and continue for the life of each participant.

The pooled income fund is typically invested for total return. The fund investments produce income but the fund is also invested so that the principal appreciates. As the value of the fund investment portfolio grows, that leads to gradually increasing levels of income. If the value of the fund’s principal increases over time, your payments generally will increase. If the fund investments decrease over time, your payments generally will decrease.

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.

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. 

How long do payments last?
Payments last for the lifetime of each payment recipient.

Irrevocable gift 
A pooled income fund gift is an irrevocable arrangement. Once you make a gift to our pooled income fund, you cannot change your mind and get the assets back. This requirement assures that the portion of the fund’s value attributable to your gift will go to support Bryn Mawr when your arrangement ends. 

Tax benefits

  • Earn an income-tax charitable deduction that will save income taxes if you itemize deductions
  • Avoid capital-gains tax
  • May reduce estate taxes if your estate exceeds the then applicable estate tax credit
  • You may reduce probate costs

You will receive tax savings from an income-tax deduction if you itemize your deductions 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 if your estate exceeds the then applicable estate tax credit. You may also reduce 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 additional income tax charitable deduction that can save you income taxes if you itemize. You will also increase your future payments from the fund.

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. (You may not contribute tax-exempt securities to a pooled income fund.)

Example

Gabriella and Edward Stanley 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.

The Stanley's 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, the Stanleys will:

  • Receive an immediate income tax charitable deduction of $15,083 for the value of their gift. Stanley will enjoy income tax savings if they itemize their deductions.
  • 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.