A pooled income fund is actually a trust fund that enables our donors to make gifts today and receive an income for life in return. Similar in concept to a mutual fund, individual gifts of cash and/or other property (except tax-exempt securities) are combined (pooled) and collectively invested by the Foundation to produce income that is shared proportionately by the contributors. At the death of the last income beneficiary, that pro rata share of the fund becomes available to OSU for the purpose designated by the donor.

By contributing to the pooled income fund, a donor can make a smaller gift than would be required by a charitable trust or gift annuity, can make contributions more frequently, and has the opportunity to receive an income that is based on the investment performance of the trust. As with other life income gifts, the donor receives a charitable income deduction in the year each contribution is made.

EXAMPLE: Tom Jones, age 64, owns stock with a market value of $25,000 that he purchased 10 years ago for $10,000. It pays a dividend of only 2%, amounting to $500 a year. His federal income tax bracket is 31%.

Tom is unhappy with the small dividend he's getting. But, if he sells the stock for reinvestment, he will pay capital gains taxes at 28% on the $15,000 gain. Tom will lose $4,200 to taxes. Then he would have a net amount of only $20,800 to invest ($25,000 - $4,200). Assuming he purchased an investment yielding 7%, he would receive $1,156 annually, compared to the $500 he is currently receiving.

While that looks pretty good, Tom learns he can do a lot better by making a pooled income gift. So he contributes his $25,000 worth of stock to the OSU Foundation Pooled Income Fund, which is also yielding 7%. Since the fund pays no tax on long-term

capital gains, the entire $25,000 is available to generate income for him. Already he has increased his income potential from $500 to $1,750 annually (7% x $25,000).

But there is more. Tom will also have a charitable income tax deduction of $9,354 for the year of the gift, saving him $2,900 of income tax (31% of $9,354). The savings of $2,900 invested at 7% yields an extra $203. This means Tom's total new income resulting from his gift is $1,953 (for a 7.8% rate of return on his $25,000). In addition, Tom has the satisfaction of knowing that after his lifetime, his gift will benefit the endowed scholarship fund he has set up in his father's name at OSU.

Note: The average annual yield of the OSU Foundation Pooled Income Fund was 7.52% for the five years ending December 31, 1995. Future earnings are not guaranteed and will vary. Individuals considering a gift should first read the prospectus which describes the management and operation of the Fund. A copy is available from the Foundation on request.