A pooled income fund is an irrevocable trust established and maintained by a public charity to which many donors can make contributions. Generally, it works as follows:
" Contributions received from individual donors are commingled for investment purposes.
" Each year, the donor (or the donor's designated income beneficiary) receives a distribution in an amount equal to the donor's pro rata share of the fund's net investment income.
" At the death of the income beneficiary, the portion of the fund attributable to the donor's gift is severed from the fund and distributed to a charity or charities of the donor's choice.
In the year of contribution, the donor may be entitled to an income tax charitable deduction.
Contributions are treated as gifts to a public charity for purposes of the income tax deductibility limitations.
The pooled income fund may accept appreciated assets from a donor and sell the appreciated property without the donor incurring immediate recognition of capital gains. If the property is encumbered by debt, other rules apply. The gift to a pooled income fund qualifies for the charitable gift and estate tax deduction. However, gift or estate tax may be incurred if the income interest is payable to someone other than the donor or the donor's spouse.
New Jersey Pooled Income Fund with Declaration of Trust by Charitable Organization is a unique financial vehicle that allows individuals to make charitable contributions while receiving income for life. This fund operates under a legally binding Declaration of Trust, which governs its operations and ensures compliance with state regulations. The New Jersey Pooled Income Fund offers several types of accounts to suit different philanthropic goals: 1. Standard Pooled Income Fund: This is the most common type, where individuals can contribute assets such as cash, stocks, bonds, or real estate to a larger pool. The contributed assets are then managed by the charitable organization, and income generated from these assets is distributed to the fund participants for their lifetime. 2. Charitable Gift Annuity Pooled Income Fund: This type allows individuals to contribute assets to the fund in exchange for an immediate charitable gift annuity. The annuity provides a fixed income to the donor for life, with the remainder going to the charitable organization upon their passing. 3. Testamentary Pooled Income Fund: This option enables individuals to include the New Jersey Pooled Income Fund in their estate plan. Assets specified in the individual's will or trust are transferred to the fund upon their passing, ensuring long-term support for the chosen charitable organization. 4. Restricted-Use Pooled Income Fund: This type allows donors to specify a specific purpose or cause for their contributions. The charitable organization manages the assets and distributes income in alignment with the donor's intended use. By participating in the New Jersey Pooled Income Fund, individuals can establish a lasting philanthropic legacy while enjoying certain financial benefits. Participants receive regular income payments based on their share of the fund's total assets, while still having the satisfaction of supporting a charitable cause or organization close to their heart. Contributions to the New Jersey Pooled Income Fund are tax-deductible, subject to certain limitations and guidelines set by the Internal Revenue Service (IRS). Donors may also benefit from potential capital gains tax savings for appreciated assets donated to the fund. It is important for individuals interested in establishing a New Jersey Pooled Income Fund to consult with their financial advisor or estate planner to determine the best fit for their charitable giving and financial goals. The Charitable Organization administering the fund can provide comprehensive information on the fund's operations, eligibility criteria, and application process.
