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Pooled Income Funds
How Does It Work?
Your gift will purchase shares of an investment pool that functions like a mutual fund. All of the fund's annual income is allocated proportionately between the pooled income fund participants, depending on the number of shares they hold. You can name yourself and/or other beneficiaries to receive the income from the shares for life. At the end of the income beneficiary's life, the shares of the fund are withdrawn and used to support Stanford for the purpose you designate.
- Receive annual income
- Diversify your investments
- Federal, and possible state, income tax deduction
- Pay no immediate capital gains tax on the transfer of appreciated assets
- Make a gift to Stanford
This Might Interest You If...
You want to make a gift to Stanford and you:
- Want to receive a variable income annually for life
- Have assets that you are able to give away. Assets that work especially well include:
- Cash or funds earning low interest rates
- Appreciated securities
- Have a large part of your portfolio in one company and want to diversify your investments
- Want to reduce your current income taxes with an income tax charitable deduction
If you decide to create a pooled income fund at Stanford, you may choose between two options that have different investment strategies:
- The Stanford balanced fund seeks regular income for beneficiaries while prioritizing growth of principal for greater future income.
- The Stanford long-term income fund seeks a higher rate of current income and modest long-term growth.
Please note that there is no guaranteed income from these funds since they depend on market performance.
Cash or securities
Making a gift though a pooled income fund will qualify you for membership in Stanford's Founding Grant Society, which recognizes those who have made planned gifts to Stanford.
If you are interested in learning more about Stanford's pooled income funds, please contact us. We would be happy to provide you with information about how a pooled income fund gift would work for you based on your circumstances.
Those considering a planned gift should consult their own legal and tax advisors. The staff in the Office of Planned Giving are happy to speak with advisors as well.
Example: Pooled Income Fund
Michael Andrews, age 65, has stocks worth $100,000, which he bought for $10,000 and which pay dividends of 2% per year. He would like to sell the stocks and diversify his asset base, but hesitates because the federal capital gains tax would be $13,500. He is in the 35% income tax bracket for ordinary income and the 15% bracket for federal long-term capital gains.
Suppose Stanford's Balanced Pooled Income Fund earns 4% (the actual return varies; current rates are available on request). By making a gift of his stocks to the balanced pool, Mr. Andrews doubles his annual earnings and diversifies his assets. In addition, he receives a charitable income tax deduction of about $52,850 (based on an IRS discount rate of 1.2%), saving roughly $18,500 in income tax, and he avoids $13,500 in federal capital gains tax. When Mr. Andrews dies, the shares that his original gift "bought" in the pooled income fund will be withdrawn to establish a fund bearing his name to support research in the School of Engineering.
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