We receive a lot of interesting calls to our Support line, but lately there’ve been a few on a topic I haven’t encountered in a while. I just took a call today from an organization with a small Pooled Income Fund (PIF) that has a new donor who wants in.
The caller asked me how to put together a proposal. I spoke in terms of the similarities and differences between a PIF proposal and a Gift Annuity proposal from Planned Giving Manager. The most important difference was that you don’t use the Gift Annuity Agreement that’s stored in the software. The legal document for completing a PIF gift is an “Instrument of Transfer.” This gift planner, and her boss, had been at their organization for five years and had never encountered one. There was little chance it existed as a Word document on their network somewhere. However, since the document is the same for all entrants to the PIF, and is part of the paperwork that created the fund itself, I suggested that she visit the file of another donor to the PIF, find the Instrument of Transfer for the gift, and type up a new copy, inserting the facts of the new gift where appropriate.
Federal Reserve Chairman Ben Bernanke said recently that the Fed is going to keep interest rates close to 0% until 2014. That means that the opportunities for unusually large charitable deductions are here for awhile.
Compare the charitable deduction available to a 65 year-old who donates to a PIF with a 2.4% valuation rate versus to a 5% gift annuity. It’s 90% compared to 55%! What’s more, the donor is young enough to benefit from years of appreciation, so over time her income from the PIF gift could far outstretch the initially higher fixed payments from the gift annuity. This is especially true if the PIF is invested in a balanced or growth-oriented fashion rather than strictly to maximize current income.
After hanging up, I realized that this call, plus another one earlier in the week from a prospective consulting client who asked if we could help them set up a new Pooled Income Fund (yes!), may be early indications that a rebirth of the long-moribund Pooled Income Fund may be underway.
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