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.
A Massachusetts Pooled Income Fund with Declaration of Trust by Charitable Organization refers to a specific type of investment vehicle established by charitable organizations in the state of Massachusetts. This fund allows individuals to make tax-deductible contributions to a charitable organization, while also receiving an income stream for life. The income generated by the fund is pooled together with contributions from other donors to invest in various assets such as stocks, bonds, and real estate. The main purpose of the Massachusetts Pooled Income Fund is to provide individuals with an opportunity to support charitable causes while still receiving financial benefits. The income received by the donors is typically based on their contribution to the fund and the overall performance of the investments. This allows donors to have an ongoing stream of income during their lifetime while ensuring that their assets are put to good use by the charitable organization. It is important to note that there may be different types of Massachusetts Pooled Income Funds with Declaration of Trust established by different charitable organizations. Some common variations of this fund include: 1. General Pooled Income Fund: This is the most common type of Massachusetts Pooled Income Fund where contributions from various donors are combined into a single pool to generate income for all participants. 2. Restricted Pooled Income Fund: In some cases, charitable organizations may create restricted pooled income funds that are specific to certain purposes or causes. For example, a fund may be established to support medical research, education scholarships, or environmental conservation. 3. Named Pooled Income Fund: Charitable organizations may also offer the option for donors to establish a named pooled income fund. This allows individuals to create a fund with their name, or in memory of a loved one, to support causes that are important to them. 4. Revocable Pooled Income Fund: This type of fund allows donors to make changes or withdraw their contributions during their lifetime. It offers more flexibility compared to irrevocable pooled income funds. To participate in a Massachusetts Pooled Income Fund with Declaration of Trust, individuals must carefully review the terms and agreement of the fund, provided by the charitable organization. This includes understanding the income distribution rules, potential tax benefits, and any restrictions or conditions imposed by the fund. In conclusion, a Massachusetts Pooled Income Fund with Declaration of Trust by Charitable Organization is an innovative investment option that allows individuals to support charitable causes while receiving an income stream for life. It provides a win-win situation, where donors can contribute to meaningful work while ensuring financial security.
