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Pooled Income Funds
A Pooled Income Fund is a tax-advantaged investment plan, similar to a mutual fund, which "pools" charitable gifts from many donors. The donor receives an income tax deduction upon making the gift and can avoid any capital gains tax on appreciated assets contributed to the fund. The fund then provides lifetime income payments to the donor, or other designated lifetime beneficiary, based upon each donor's pro-rata share of the pool.
SOHO does not presently maintain its own fund, but can offer the benefits of a pooled income fund through a partnership with the San Diego Foundation. Donors can benefit SOHO by a donation to the San Diego Foundation's Pooled Income Fund III, specifying that upon the donor's death, their share of the fund be distributed to SOHO or be used to establish an endowment to benefit SOHO. The donor (or other lifetime beneficiary) must be at least 50 years of age, and the initial donations must be at least $5,000.
Donors can benefit SOHO by making an irrevocable gift of at least $5,000 to the San Diego Foundation's Pooled Income Fund III (the "Fund"). Each gift is pooled with the gifts of other donors for each increased investment leverage in a broadly-diversified portfolio of high-quality income-oriented securities. The trust department of a major bank (currently City National Bank) is the Fund's trustee with the responsibility for its custody, investment management, accounting, tax reporting and disbursement of the income payments. Each donor is assigned shares in the pool based on the value of the gift compared to the total value of the Fund. Quarterly income is paid to the donor (or another beneficiary of the donor's choice) based on the number of shares assigned. Donors may make additional gifts to their accounts at any time in increments of $1,000 or more.
The Fund can be expected to produce a rate of return that compares favorably with other prudent forms of investment. The rate will vary as influenced by prevailing interest rates and securities market conditions.
When the income beneficiary dies, his/her shares are severed from the Fund and provide support for the organization specified by the donor.
Gifts to the Fund may be either cash or easily marketable securities. Real Estate is not acceptable. When securities are given, they are sold by the trustee and converted to Fund shares. It is quite advantageous to give low-yielding by highly appreciated securities, because the donor can completely avoid paying capital gains tax on the sale and at the same time usually receive a much higher yield than many older stocks earn.
Donors who itemize may deduct a portion of their gift from both Federal and state income tax returns. For some, estate taxes and probate costs may be reduced as well.
Donors may choose that the severed assets:
- Establish an endowment fund at The Foundation named after the donor that will benefit SOHO; or
- Be distributed at SOHO's choice either into an endowment fund at The Foundation, or outright to SOHO.
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WAYS TO DONATE
Planned Giving
Special Funds
More ways to Support SOHO
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