Kitces: CRT vs split interest pooled income funds

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is50xenough
Posts: 242
Joined: Sat Jul 28, 2018 1:37 pm

Kitces: CRT vs split interest pooled income funds

Post by is50xenough »

Have high regard for Kitces so wonder what folks think of Split-interest using new pooled income funds over CRTs? Seems like could be good opportunity although in reading this seems like end up giving a larger amount of money of the starting "deposit" to the charity than what I thought CRTs (CRUT or CRAT?) gave.

Love to hear some discussion.

This article seems public since allowed to email to friends---you are all my friends right.....?

Maximizing Split-Interest Charitable Deductions With New Pooled Income Funds Over CRTs
https://www.kitces.com/blog/charitable- ... n=ShareBar
Topic Author
is50xenough
Posts: 242
Joined: Sat Jul 28, 2018 1:37 pm

Re: Kitces: CRT vs split interest pooled income funds

Post by is50xenough »

I should note that I read wiki and searched forum but don’t see much on split interest pooled income and for sure no comparisons.
Phil DeMuth
Posts: 182
Joined: Thu Mar 06, 2008 7:02 pm

Re: Kitces: CRT vs split interest pooled income funds

Post by Phil DeMuth »

The Pooled Income Fund (PIF) is an under-utilized vehicle for split gifts to charities and individuals. Donors get an up-front charitable deduction and then their named beneficiaries get the annual dividends and income from the fund. The charities get the residual amount after the beneficiaries die.

I think the problem is that PIFs must be offered by public charities, which look to their short-term interests by investing the proceeds for maximum benefit to themselves (via high fees and growth-oriented investments) and minimum payout to the non-charity beneficiaries. Expense ratios, both for operating the funds themselves as well as the underlying investments they make, are high. Since they don't pencil out, no one uses them and there is little interest.

If Vanguard's Donor Advised Fund offered a low ER "New Pooled Income Fund" (see Kitces' article) and invested the money, e.g., in a Vanguard equity-income fund, the world would beat a path to its door.

Or -- am I wrong?
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