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.
The South Dakota Pooled Income Fund with Declaration of Trust by Charitable Organization is a unique financial tool that allows individuals to support charitable causes while still receiving a steady stream of income. This fund operates based on the concept of pooling donated assets from multiple individuals into a trust, which is then invested to generate income. The Declaration of Trust is a legal document that outlines the specific terms and conditions of the fund's operation, ensuring transparency and accountability. It provides details on how the income will be distributed among the beneficiaries and how donations will be managed and utilized for charitable purposes. There are several types of South Dakota Pooled Income Funds offered by charitable organizations, each with its own unique features and benefits. Some of these variations include: 1. Charitable Remainder Pooled Income Fund: This type of fund allows donors to transfer assets to the trust, receiving a charitable income tax deduction in return. The donor and their designated beneficiaries receive income from the fund for a specified period, after which the remaining assets are distributed to the charitable organization(s) specified in the Declaration of Trust. 2. Charitable Lead Pooled Income Fund: In this case, the income generated by the fund is primarily directed to the charitable organization(s) outlined in the Declaration of Trust for a specific period of time. After this period, the remaining assets are typically returned to the donor or their designated beneficiaries. 3. Perpetual Pooled Income Fund: This particular fund is designed for individuals who wish to establish a lasting charitable legacy. The income generated by the trust is distributed to both the donor and the designated charitable organizations throughout their lifetime. However, the fund remains intact and continues to benefit charitable causes even after the donor's passing. By participating in a South Dakota Pooled Income Fund with Declaration of Trust, individuals have the opportunity to make a lasting impact on charitable organizations and causes they care about while still benefiting from a dependable income stream. It is crucial, however, for potential donors to thoroughly research and consult with financial advisors to ensure that the fund aligns with their philanthropic goals and financial circumstances.
