A pooled income fund is actually a trust, similar to a mutual fund. Your gift is combined with the gifts of others. You make an irrevocable transfer of assets, usually cash or marketable securities to the fund. In return, you and/or the beneficiaries you name receive a proportionate share of the fund’s earnings for life, paid quarterly.

Income is variable, depending on the fund’s performance, and is taxable to the beneficiaries as ordinary income. You receive an immediate charitable deduction for federal income tax purposes. Appreciated property can be given to the pooled income fund without a resulting capital gain tax. After the lifetime of the last income beneficiary, the principal becomes available to Suffolk.

Benjamin I.’s pooled income fund

Benjamin I. invested $2,000 in Company X many years ago. Over the years, the stock rose in value to $12,000, but lately has averaged only about 2 percent of dividend income each year. Benjamin was considering reinvesting the stock in a higher-yield account, but wanted to avoid paying a capital gains tax. He is a regular cash donor to Suffolk University, where he earned his MBA from the Executive MBA program. As Benjamin approached his 50th birthday, he decided to make a significant contribution to Suffolk.

He transferred his stocks to a pooled income fund with Suffolk, which will increase his income from the investment. In addition, he received an immediate tax deduction and realized a savings in capital gains taxes. As the pooled income fund grows, Benjamin’s annual payments from the gift are expected to increase as well.

By making a gift to a pooled income fund, Benjamin I. has:

• Received an immediate income tax deduction in the year of the contribution
• Avoided capital gains tax
• Increased his income
• Make a meaningful gift to Suffolk University

Please contact the Office of Advancement to learn more about pooled income funds.