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Pooled Fund Income
A pooled income
fund resembles a no-load mutual fund, with gifts from many donors and distributions of
net income to each beneficiary.
Pomona College offers two pooled income funds -- one that emphasizes income and one that is balanced between growth and income.
The balanced fund is known as Plan IV. It was established in 1969. It is currently invested 66% in bonds and has a current yield of 4.7%. This yield, net of any expenses, is distributed to beneficiaries. The College pays the cost of the investment adviser. In the 10 years ending in 2000, Plan IV has had……
- An average total return of 12.4%
- An average yield of 7.1%
- A range of yield of 8.6% to 5.6%
- An average growth in value of 4.9%
- Percentage increase in unit value of 56%
The growth fund is known as the Capital Fund. It was established in 1981 and is appropriate for younger beneficiaries. It is currently invested 46% in bonds and has a current yield of 3.6%. The yield, net of expenses, is distributed to beneficiaries. The College pays the cost of the investment adviser. In the 10 years ending in 2000, the Capital Fund has had……
- An average total return of 13.6%
- An average yield of 5.0%
- A range of yield of 5.6% to 4.4%
- An average growth of 8.2%
- Percentage increase in unit value of 110%
You may want to contribute to a pooled income fund to benefit a housekeeper, or a valued friend, or a child, or as a savings plan for yourself.
Here is An Example:
"I'd Like to Make a Larger Gift to My 25th Class Reunion."
Henrietta Sage is celebrating her 25th reunion with her class at Pomona in April of next year. She is coming from Massachusetts for the weekend's events. She wants to make a significant gift to the College to mark this event, in addition to her alumni fund gift.
Ms. Sage, age 46, decides to make a gift to the Capital Fund for this purpose. This fund emphasizes growth and is therefore appropriate for younger donors. She contributes securities worth $25,000 that she bought ten years ago when they were worth $15,000.
Based on the current Fund payments (about 3.7%), Ms. Sage will receive an income of approximately $925 in the first full year. Her payments will increase in coming years if the Fund's assets increase in value and as interest rates go up again. In the last ten years, the unit value of the Capital Fund has increased nearly 110% in addition to distributing its income to beneficiaries. Its income distributions have ranged between 5.6% and 3.7% in that time. Income payment will continue to Ms. Sage for the rest of her life.
Ms. Sage will be entitled to a charitable deduction of approximately $5,600. If she is in the 27% federal income tax bracket, this will save her $1,512 plus additional amounts on her state income tax return. She will also avoid the $10,000 in capital gains that she would incur if she sold the stocks herself.
Please contact us for more information on your particular situation.
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