Pooled Income Fund

A preferred income option for donors who would like to make a gift to UA but need income, especially those with appreciated securities, is the pooled income fund. A pooled income fund is very similar to a mutual fund. UA's Pooled Income Fund is managed as a “high yield” fund with investments designed to produce a current income return consistent with prudent investment risk.

To make such a gift, you sign a pooled income-fund agreement and transfer cash or appreciated securities to the Fund. Your gift purchases “units” in the fund based on the fair-market value of your gift and the current market value of fund units. Income from the pooled fund is distributed on a pro rata basis to the beneficiaries of the fund. Beneficiaries receive income for life and at the death of a beneficiary, the value of his/her units in the Fund will be distributed to UA and benefit any program you choose. You avoid capital-gain tax, if any, in the appreciated asset you use to make your gift.

Example: George and Miriam purchased growth stock for $20,000 ten years ago. It is now valued at $100,000, but the annual dividends are only $2,000. Now that they are both aged 65, they would like to augment their retirement income. To do this, they transfer the stock to UA's Pooled Income Fund, which currently has a 4.0% payout rate.

In the first year, they will receive a $4,000 payment—twice the dividends they were receiving. These payments could increase over time if the assets of the pooled income fund grow in value and generate more income. Moreover, George and Miriam avoid tax on their profit in the stock, and they receive an income-tax charitable deduction of $42,577. In their 24% tax bracket, this saves them $10,218 in income tax (24% x $42,577).

When the last beneficiary dies, the value of your pooled fund units will benefit any program of UA you choose.