Contents
Contents Contents
§ 13.9 MULTIORGANIZATION POOLED INCOME FUNDS2. the donor may designate the specific charitable organization for whosebenefit the community trust will use the remainder interest.In this connection, the IRS reviewed two situations. 95In the first of these situations, a community trust proposes to establish apooled income fund that it will maintain. Under the terms of the governinginstrument of the fund, donors will contribute to the trust an irrevocable remainderinterest in the property that the donors transfer to the fund and the communitytrust will have full discretion to determine how to use the remainderinterests to further its charitable purposes.The IRS noted that, in this situation, although the community trust may electto use some or all of the remainder interest for the benefit of other charitableorganizations, the trust is given full dominion and control over the remainderinterest. Therefore, the donor is treated as contributing the remainder interest tothe trust and, because the trust will maintain the fund, the pooled income fundmaintenance requirement is satisfied. 96In the second situation, the governing instrument of the pooled income fundallows a donor, in the instrument of transfer, either to request or require that thecommunity trust place the proceeds from the remainder interest in one of its designatedfunds that is a component part of the trust, for the benefit of one or morecharitable organizations. (As noted, these component funds are treated as a singleentity. 97 ) The IRS held that even though the donor in this situation will eitherrequest or require that the remainder interest pass in this fashion, the donor willbe regarded as contributing the remainder interest to the trust. Because the communitytrust is considered as maintaining the pooled income fund, the fund isheld to qualify under these rules. 98 (The IRS’s position in connection with thissecond situation is a reversal of an earlier position, holding that a donor in thatcircumstance would be treated as having made a contribution of the remainderinterest, not to the community trust, but rather to the charitable organizationdesignated by the donor. Because that charitable organization did not maintainthe pooled income fund, it was the IRS’s view that the fund would fail to meetthe tax law requirements. 99 )(c) Other CircumstancesThere may be other circumstances in which a multiorganization pooled incomefund (or something approximating it) may be established. For example, theremight be a national organization with chapters or local organizations that areloosely affiliated, but bear other designations and are not under the generalsupervision and control of the national organization. Or, there might be a95 Again, there are two underlying assumptions: (1) each of the potential beneficiary organizations qualifies as apublic charity eligible to maintain a pooled income fund (see § 13.9(a), note 90), and (2) the pooled incomefund would otherwise qualify under the tax law requirements, so that the only issue is with respect to the maintenancerequirement (see § 13.9(a), note 91).96 Rev. Rul. 96-38, 1996-2 C.B. 44.97 See note 98.98 Rev. Rul. 96-38, 1996-2 C.B. 44.99 Rev. Rul. 92-108, 1992-2 C.B. 121, revoked by Rev. Rul. 93-8, 1993-1 C.B. 125, so that the IRS could subjectthe matter to “further study.” Notice 93-9, 1993-1 C.B. 297. 493
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- Page 990: § 12.11 CALCULATION OF CHARITABLE
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- Page 1040: CHARITABLE GIFT ANNUITIESthe person
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§ 13.9 MULTIORGANIZATION POOLED INCOME FUNDS2. the donor may designate the specific charitable organization for whosebenefit the community trust will use the remainder interest.In this connection, the IRS reviewed two situations. 95In the first of these situations, a community trust proposes to establish apooled income fund that it will maintain. Under the terms of the governinginstrument of the fund, donors will contribute to the trust an irrevocable remainderinterest in the property that the donors transfer to the fund and the communitytrust will have full discretion to determine how to use the remainderinterests to further its charitable purposes.The IRS noted that, in this situation, although the community trust may electto use some or all of the remainder interest for the benefit of other charitableorganizations, the trust is given full dominion and control over the remainderinterest. Therefore, the donor is treated as contributing the remainder interest tothe trust and, because the trust will maintain the fund, the pooled income fundmaintenance requirement is satisfied. 96In the second situation, the governing instrument of the pooled income fundallows a donor, in the instrument of transfer, either to request or require that thecommunity trust place the proceeds from the remainder interest in one of its designatedfunds that is a component part of the trust, for the benefit of one or morecharitable organizations. (As noted, these component funds are treated as a singleentity. 97 ) The IRS held that even though the donor in this situation will eitherrequest or require that the remainder interest pass in this fashion, the donor willbe regarded as contributing the remainder interest to the trust. Because the communitytrust is considered as maintaining the pooled income fund, the fund isheld to qualify under these rules. 98 (The IRS’s position in connection with thissecond situation is a reversal of an earlier position, holding that a donor in thatcircumstance would be treated as having made a contribution of the remainderinterest, not to the community trust, but rather to the charitable organizationdesignated by the donor. Because that charitable organization did not maintainthe pooled income fund, it was the IRS’s view that the fund would fail to meetthe tax law requirements. 99 )(c) Other CircumstancesThere may be other circumstances in which a multiorganization pooled incomefund (or something approximating it) may be established. For example, theremight be a national organization with chapters or local organizations that areloosely affiliated, but bear other designations and are not under the generalsupervision and control of the national organization. Or, there might be a95 Again, there are two underlying assumptions: (1) each of the potential beneficiary organizations qualifies as apublic charity eligible to maintain a pooled income fund (see § 13.9(a), note 90), and (2) the pooled incomefund would otherwise qualify under the tax law requirements, so that the only issue is with respect to the maintenancerequirement (see § 13.9(a), note 91).96 Rev. Rul. 96-38, 1996-2 C.B. 44.97 See note 98.98 Rev. Rul. 96-38, 1996-2 C.B. 44.99 Rev. Rul. 92-108, 1992-2 C.B. 121, revoked by Rev. Rul. 93-8, 1993-1 C.B. 125, so that the IRS could subjectthe matter to “further study.” Notice 93-9, 1993-1 C.B. 297. 493