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Phillips Academy Giving

Andover Pooled Income

Pooled income funds are much like mutual fund shares. Each income recipient in the pool receives, on a quarterly basis, a proportionate share of the variable income earned by the fund’s portfolio of equities and fixed income securities. The minimum initial gift to establish an Andover pooled income fund is $10,000 for one or two lives, and donors are able to make subsequent gifts of $2,500 or more at any time. Gifts may be in the form of cash or of readily marketable securities, which offer the additional benefit of capital gains tax avoidance. In exchange for making a gift to a pooled fund, the donor also receives an immediate charitable income tax deduction for the discounted value of the gift to PA.

Andover offers two pooled income funds, each with its own financial objective and investment strategy:

Andover Pooled Income Fund I is a growth fund invested for current income as well as long-term growth of income and principal. The fund’s variable yield is approximately 2.59 percent, and income beneficiaries must be at least 40 years old.

Andover Pooled Income Fund II is an income fund invested for preservation of capital. Its variable yield is currently 3.07 percent and income beneficiaries must be at least 50 years old.

Pooled Income Fund: How it works

  1. You transfer cash, securities, or other property to the pooled income fund.
  2. You receive an income tax deduction and pay no capital gains tax.
  3. The fund pays your share of its income each year to you or anyone you name for life.
  4. When the gift term ends, your share of the fund's principal passes to Andover

Example

Eli Pearson, age 68, wants to support Andover and has securities worth $50,000 that he originally bought for $5,000. He would like to make a gift of the stock to Andover but is concerned about losing the $750 in annual income that he and wife Margaret, age 66, rely upon. By transferring the securities to the Pooled Income Fund II, Eli converts their assets into an arrangement paying an initial variable income of $1,535 annually (more than three times the former stock’s annual dividend). The arrangement will continue to pay until both are deceased. Eli also generates a charitable income tax deduction of approximately $26,204 and avoids capital gains taxes of $6,750.

Charitable Income Tax Deductions
for Pooled Income Funds

Pooled Income Fund I (2.59% variable rate)

Sample Age
One Life
Deduction Amounts*
$10,000 Gift
55 $5,335
60 $5,891
65 $6,456
70 $7,029
75 $7,591
80 $8,108
Two Lives
55, 50 $4,193
60, 55 $4,719
65, 60 $5,286
70, 65 $5,885
75, 70 $6,508

Pooled Income Fund II (3.07% variable rate)

Sample Age
One Life
Deduction Amounts*
$10,000 Gift
55 $4,714
60 $5,306
65 $5,919
70 $6,552
75 $7,183
80 $7,772
Two Lives
55, 50 $3,505
60, 55 $4,043
65,60 $4,636
70,65 $5,278
75,70 $5,958
  • Based upon the IRS discount rate of 2.4%. Rates change monthly and your deduction may vary. To receive current deduction quotations, contact the Gift Planning Office at 978-749-4297.