Pooled Income Funds
Pooled income funds are gifts that are pooled with other contributions in a professionally managed fund. The donor or other beneficiary receives a proportionate share of the fund's annual income for life. The income varies depending on how much the fund earns and the number of shares the donor holds in the pool.
Gift of appreciated marketable securities held more than one year by the donor completely avoids capital gains taxes, and the income is taxed at your ordinary level.
Smith College has two pooled income funds:
The Income-Oriented Pooled Fund
The income-oriented pool fund returns a higher rate of income to the beneficiary with little capital appreciation.
Growth-Oriented Pooled Funds
The growth-oriented pooled fund returns less income to the beneficiary, but realizes greater capital appreciation. At the end of the beneficiary's lifetime, the value of her/his shares is withdrawn from the fund for the use of the college.
Nancy '29 wanted to create income streams for her four children, beginning immediately and continuing for their lifetimes. Since the children were all older than 50 but not yet 60 years of age, gifts through Smith's pooled income funds satisfied her objectives. In donating securities through a pooled fund, Nancy gave away all of her capital gain in those assets. In each case she received a charitable tax deduction.
Nancy majored in English and French at Smith, with special interests in psychology, philosophy and human nature. In 1930 she married a recent Yale graduate who believed that Commencement should be the beginning of ongoing, lifelong education.
"I had always planned to mention Smith in my will, but I discovered Smith had the same opportunities for deferred giving as Yale, and I decided I would not postpone the pleasure of making the gift. I named my four children as income beneficiaries for their lives, making gifts to them now, rather than waiting for their share from my tax-reduced estate at death."