Pooled Income Funds
Q. What is a Pooled Income Fund?
It is a special fund contributed to by any number of donors with the understanding that each donor will receive a pro rata share of the income from the Fund during the rest of their lives (or for the lives of the persons they designate to receive the income). When each donor (or their designee) dies, the value of those shares becomes the property of Shriners Hospitals for Children® for its charitable purposes. This ultimate gift to the hospitals is called the "charitable remainder gift." Gifts to the fund are "pooled together" for the purpose of creating income.
Q. How would my life income interest be determined and how frequently would this income be paid to me?
A donor's life income gift is represented by participating units in the Fund, similar to a mutual fund arrangement. The amount of income is determined by the rate of return earned by the entire Fund for that year. Payment of income will be made to you quarterly. There will be no annual fee taken by Shriners Hospitals for Children® while acting as trustee of the Fund. Shriners Hospitals for Children® also pays all custodial and investment fees charged by the Fund's custodian and investment advisors.
Q. Is it possible for the Life income Agreement to provide income for both myself and another, for as long as we live?
Yes. This is called a Two-Life Income Agreement.
Q. What type of assets are usually contributed by donors to your Pooled Income Fund?
Normally, long-term appreciated securities or cash. The tax laws do not permit the acceptance or our investment in tax-exempt securities, real estate or depreciable assets.
Q. Would there be any special advantages to me if I were to fund your Life Income Agreement with long-term appreciated securities?
Yes. The value of your charitable remainder gift would be based on the fair market value of the securities contributed, not your cost basis. In addition, there would be no capital gains implications to you when appreciated securities are transferred to our Fund or later sold. Our pooled Income Fund also pays no capital gains taxes on sales of securities if your holding period was longer than one year. Under the tax laws, our Fund takes over your holding period. Thus, if your holding period for the securities that you contribute to the Fund was more than one year, there will be no capital gains tax on a sale made by the Fund. Even if you should contemplate a Two-Life Income Agreement, there will be no capital gains tax involved on the transfer of appreciated securities.
Q. If I am not a Shriner, am I still able to participate in your Pooled Income Fund?
Yes, Shriners Hospitals for Children’s® Pooled income Fund is open to all persons.
Q. Are there minimum or maximum amounts which I can contribute under your life income arrangements?
The minimum initial contribution is $5,000, with no more than two beneficial life estates involved. There is no minimum for additional contributions, and there is no maximum for initial or additional contributions.
Q. Can I become a participant in the Pooled Income Fund at any time during the year?
Yes, there are no restrictions on when you can come into the Pooled Income Fund.
Q. If I desire, would I be able to designate one particular Shriners Hospital to ultimately receive my charitable remainder gift?
Yes, the Board of Directors of Shriners Hospitals for Children® will abide by your specific wishes in this respect. However, all donations or bequests, including charitable remainder gifts that are not restricted by the donor are deposited to the Shriners Hospitals for Children® endowment fund.
Q. Are there income tax advantages to me if I enter into a Life Income Agreement with you?
Yes. You may be entitled to an immediate charitable contribution deduction in the year of your gift on your personal tax return. The amount of your charitable deduction is determined by federal government tables. Your charitable gift would be reduced by the present value of your life income interest. The actual deduction will be dependent on the age of the designated beneficiaries and the size of your contribution. The charitable deduction will be smaller in the event you desire a Two-Life Income Agreement, since it then would be dependent on the age of both beneficiaries.
Q. How much am I allowed as a present income tax charitable deduction on a contribution, and can I carry over any excess contribution on subsequent income tax returns?
Generally, if your gift to our Fund is cash, you would be allowed to take a charitable deduction of up to 50 percent of your adjusted gross income. If your charitable gift is over the permissible annual contribution deduction, you are allowed to carry the excess over into the next five (5) succeeding tax years — thus, six years in all. If your gift, on the other hand, is of long-term appreciated securities, you are entitled to a 30 percent deduction on your adjusted gross income, again with a five-year carryover of any excess charitable contribution.
Q. How can I compute what my specific deduction will be?
If you will furnish us with your date of birth, or, if there are to be two income beneficiaries, both dates of birth, and the approximate amount of your anticipated contribution, we will be happy to furnish you and your advisors with the amount of the approximate charitable deduction based on the information supplied.
Q. What is my situation as to federal estate taxes should I become a participant in your Life Income Agreement?
Should the Life Income Agreement be based on your life income alone, the total value of your interest in our Pooled Income Fund would effectively be removed from your taxable Estate. If your Life Income Agreement involves your life and that of a non-spouse survivor's life interest, the full value of your interest in the pooled income fund would be includible in your taxable estate, however, your estate may claim a charitable deduction of the present value of the remainder interest based on the fair market value of the trust and the non-spouse survivor's age at your death. Should the other beneficiary be your spouse or not survive you, no part of your interest in our Pooled Income Fund would be subject to tax in your estate under present law.
Q. Besides favorable tax benefits to me, what are some of the other advantages of a Pooled Income Fund gift?
- The personal satisfaction of making a substantial contribution to your favorite philanthropy during your lifetime.
- The securities are lodged for safekeeping with a large financial institution.
- No obligation to pay an annual fee as long as Shriners Hospitals for Children® acts as trustee in holding the Fund assets.
- Greater diversification of assets than if you yourself established a separate charitable remainder annuity trust or unitrust.
- The opportunity to convert low-yield securities to a higher-yield common diversified fund at low or possibly no tax cost.
- Permitting the direct distribution of Fund property at death, thus reducing probate expenses and delays.
Q. Will I receive a written statement from Shriners Hospitals for Children® informing me of the amount of income that I should report on my federal income tax return?
Yes, a statement will be furnished to you shortly after the end of each calendar year.
Q. Has the Shriners Hospitals for Children® Pooled Income Fund received an approved Revenue Ruling from the Internal Revenue Service?
Yes. Copies will be furnished to you or your advisors upon request.
Q. If I want to make my contribution to you in securities, how would I go about doing this?
Your broker may call the Shriners Hospitals for Children Office of Development at 813-281-0300 or 800-241-4438 for instructions. If you choose to mail to us an “unendorsed” certificate, it should be sent in one envelope to: Office of Development, Shriners Hospitals for Children, 2900 N. Rocky Point Dr., Tampa, FL 33607. In a separate envelope, along with an explanatory letter, there should a blank stock power form signed in the same manner as your name appears on the certificate, with your signature Medallion Guaranteed by either a bank or broker who is a member of the New York Stock Exchange.
Pooled Income Fund Gift Calculator
For more information
For more information on supporting Shriners Hospitals for Children® through a planned gift, please contact the Planned and Major Gift office at (813) 367-2241 or by email at email@example.com. Shriners Hospitals for Children® is a fully qualified 501(c)3 charitable organization under IRS regulations. Donations are tax-deductible to the fullest extent provided by law.