Contents

FUNDAMENTALS OF PLANNED GIVINGassets of a pooled income fund is frequently determined as of the first businessday of each fiscal year and as of the first business day of each of the other threefiscal year quarters.The value of a unit is determined by dividing the fair market value of thefund’s assets on the determination day by the number of outstanding units. Giftsgenerally are added to the fund on the next determination day following receipt,and the income interest in the gifts is assigned a number of units determined bydividing the fair market value of the gift on that day by the value of a unit determinedon that day. If a donor provides for two or more beneficiaries to receiveincome with respect to his or her gift concurrently, the units assigned to theincome interest in the gift will be allocated proportionately among the concurrentbeneficiaries so that they will share the income interest in the gift as specifiedby the donor.The charitable organization involved should reserve the right, in appropriatecircumstances, to add gifts to the fund on a day other than a determinationday, in which case a special valuation of units is made on that day.Once determined, the number of units assigned to the income interest (orshare thereof) in a gift will not change, but the value of a unit will change as thevalue of the fund’s assets changes. When principal amounts are severed from thefund and transferred to the charitable organization, the units assigned or allocatedthereto are cancelled.(c) Distribution of IncomeThe documents associated with a pooled income fund should specify the timingof the distribution of income. For example, if the calendar year is the fiscalperiod, donors may be notified that distributions of the income of the fund willbe made quarterly, on or about the 15th day of the month following the close ofeach calendar quarter (that is, about the 15th of January, April, July, and October)in each year, to income beneficiaries in proportion to their respective incomeinterests. All income must be distributed annually; to the extent that any portionof the income for a taxable year has not been fully distributed by the four abovedescribedquarterly payments, then an additional make-up payment must bemade within the first 65 days of the taxable year next following.Each unit outstanding for less than the entire year will be entitled to receivea fractional payment based on the portion of the year for which it was outstanding.Realized and unrealized appreciation or depreciation of principal shouldnot be taken into account in determining income. Therefore, the following itemsshould be treated as principal and not income: (1) gains and losses from the sale,exchange, redemption, or other disposition of investment assets; (2) stock dividends,stock splits, and similar distributions; (3) capital gain dividends of regulatedinvestment companies (mutual funds); (4) liquidating distributions; and(5) any other dividends or distributions not deemed to be taxable as incomeunder the federal tax laws.The income payable with respect to each unit will depend, of course, on theincome earned by the pooled income fund; the charitable organization cannotpredict what that income will be. 158