Clarkson Pooled Life Income Fund
Gifts from many donors are co-mingled for investment purposes in the Clarkson University Pooled Life Income Fund, a separate entity from, but under the control of, Clarkson University. The income from the investment of the fund is distributed to the participants each quarter.
Because only the income from the investment of the fund is distributed to beneficiaries each quarter, the level of income will vary from year to year based on the performance of the fund. The fund is unitized to determine the amount paid to each beneficiary. The investment philosophy of the fund is to generate a balance of income and capital appreciation each year to provide increasing income to beneficiaries and a larger remainder for Clarkson.
The minimum initial gift to the fund is $10,000. Additional gifts may be made at any time for as little as $1,000. Payments may be made to one or two beneficiaries for life. Income beneficiaries must be at least 50 years old. Gifts to the fund may be cash or publicly traded securities, usually held long term. The start of income from the fund cannot be deferred. Payments must be made on a quarterly basis (at the end of March, June, September and December), and may be mailed to you or deposited electronically to your bank account. Clarkson does not charge any fees to generate financial projections or contracts to the pooled fund.
Income for someone else: The pooled fund may be used to provide income for someone other than the donor or the donor’s spouse. This can be a creative way to make a gift to Clarkson and also provide income to a parent, sibling, child or other loved one. Generally, an income tax charitable deduction is generated for the donor at the time the gift is made. The donor must be careful, however, in deciding which asset to gift to the fund, and what level of income to provide to the beneficiary. If an appreciated asset is used, the donor may be required to declare some or all of the capital gain on the asset. Also, the income payments are considered a “gift” from the donor to the beneficiary, so gift tax may be an issue as well. With careful planning, problems can be avoided.
Deferred income payments: You cannot defer the start of income payments from the fund.
Testamentary gifts: A gift to the fund may be planned through your estate to provide income for heirs before passing the remainder to Clarkson. It is important to discuss this option with your gift planning and legal advisors to structure the gift correctly and make sure the plan will meet your intentions.
Gifts to the pooled life income fund may count in the Evolution to Excellence fundraising campaign, in your next anniversary reunion, and towards Roundtable annual recognition. Contact the Annie Clarkson Society for help related to your unique circumstances.
Clarkson invests its pooled fund assets with BNY Mellon Wealth Management.
Create your own pooled life income fund projection with our gift-with-income calculator or request a pooled life income fund projection from Clarkson.
View a Comparison Chart of gift-with-income plans.
Request our workbook, Will a Gift-with-income Plan Work for Me?
Tax and Financial Implications
Because your gift to the fund is irrevocable, the government allows an income tax charitable deduction for some portion of your gift. The age(s) of the income beneficiary(ies) and the historical rate of return for the fund are the primary determinants of the amount of the income tax charitable deduction.
If you gift an appreciated security, (held long term), to the fund, in most cases you will not need to declare any capital gain on that security.
Assets grow tax free within the fund. Pooled fund payments to beneficiaries are taxable income. All of the income from the fund is taxed as ordinary income.
While projections can be created, the actual remainder value for Clarkson will depend on the market performance of the fund and how long the fund makes payments to beneficiaries. Projecting the remainder value may be of particular interest to a donor who wishes to provide a remainder to Clarkson at a certain dollar level.
Process to Create
While every gift situation is unique, there are several steps that may be outlined to help clarify the process. When an individual creates a gift-with-income plan at Clarkson, he/she will most likely follow steps similar to the ones below. The process often begins with a conversation:
- We talk. An initial conversation with the Annie Clarkson Society is advisable to help the University understand your priorities and goals and determine which plan(s) may best fit your needs. The Annie Society will then prepare a proposal for your review.
- You review. The proposal will include a financial projection with explanations and background information for review by you and your advisors. Additional information or further projections may be required to answer questions and clarify the exact benefits and circumstances of a plan that will be right for you.
- You decide. Once all of the information is presented and reviewed, it is time to decide if the timing and circumstances are right to proceed and create your plan.
- You arrange transfer. At this point you write the check, authorize transfer of the stock, or otherwise arrange for ownership of the asset(s) to pass to the Clarkson Pooled Fund account. Once ownership of the asset passes to the account, the University determines the gift date and the value of the gift. (It’s easier with cash, but gets more complicated with multiple transfers of stock, for example). That data then allows the University to prepare final calculations and a pooled fund contract.
- You sign. Final materials and contracts are sent for signature, along with a gift receipt. At this point the Annie Society will arrange the method for future income payments. The office will also wish to make sure the University has documented your wishes for the final use of your gift at Clarkson.
- You relax, payments begin. The first payment is made at the end of the current quarter. A first payment may be a partial payment, depending on the date of the gift. The Annie Society will also contact you to ensure that the first payment was processed correctly.
What to Expect After Your Plan is Created
The creation of your plan is the start of a new relationship with Clarkson:
- If you are a new member of the Annie Clarkson Society, you will receive letters of welcome.
- At the end of each payment period, you will receive either your check, or a “cash advice” of your electronic payment directly from BNY Mellon Wealth Management through their Boston offices.
- You will receive a financial report from the Annie Society each January.
- K1 income tax statements are targeted for mailing directly from BNY Mellon by February 28 each year.
- As an Annie Clarkson Society member, you will receive the society newsletters and annual report each year.
- Clarkson asks that income beneficiaries report to the Annie Society any change in address or bank account information as soon as possible, so that there is no interruption in the processing and receipt of your payments.
This web page does not provide legal or financial advice, nor is it a comprehensive review of the topic. You should consult your legal and financial advisors and Clarkson University before making or planning your gift. (rev 4/2014)
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