Fidelity Pooled Income Fund

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Fidelity Pooled Income Fund is a stand alone, publicly available charitable pooled income fund. Since most pooled income funds are run by individual charities, the Fidelity fund offers a transparency that is unique in the charitable pooled income fund universe. The 2010 annual report lists the fund as having 683 accounts, with net assets of 79,699,605 dollars.

As is the case with all pooled funds, income earned by the fund is distributed to the income beneficiaries; the principle is distributed to the charity as a remainder interest at the death of the income beneficiaries. Donors receive a charitable gift income tax deduction on the discounted value of the charitable remainder gift.

Minimum investment

All contributions to a pooled income fund are irrevocable. Fidelity sets the minimum contribution to its pooled income fund at $20,000. Additional contributions are set at a minimum of $5,000.

Costs

The Fidelity Pooled Income Fund incurs two levels of costs: the administrative fees of running the charitable trust; and the fund management expenses of the investment portfolio. The following table provides the administrative expense ratios for the fund.

Annual Administrative Fee: Pct.
First $500,000 0.50% (50 basis points)
Next $500,000 0.375% (37½ basis points)
Next $1,500,000 0.25% (25 basis points)
Next $2,500,000 0.125% (12½ basis points)

The fund invests in the Fidelity Strategic Income Fund [1], a bond fund which invests in high yield securities, U.S. Government and investment-grade securities, emerging market securities, and foreign developed market securities. The fund has an 0.70% expense ratio.

A donor will thus incur total costs ranging from 1.20% of pool assets for donors holding less than $500,000 in the pool; to an expense ratio of 0.82% for donors holding more than $2,500,000 in the pool.

Income and beneficiary options

The Fidelity Pooled Income Fund has, as a split-interest charitable vehicle, two classes of beneficiaries: the individual income beneficiary(s} who receive a lifetime income from the fund; and the charitable remainder beneficiary(s) who receive the principal of the fund after the death of the income beneficiary(s). Income beneficiaries receive a quarterly distribution of the fund's income, and the beneficial interest can be taken in one of three options:

  • A donor can take the income interest as the sole beneficiary;
  • A donor can name a joint beneficiary and the two may take the income concurrently;
  • A donor may name a joint beneficiary and the two may take the income consecutively (at the death of one, the other begins to receive the income).

After the death of the income beneficiaries, the principle is donated to the charity remainder beneficiaries. Fidelity offers flexible remainder beneficiary options:

  • A donor may recommend that the remainder interest be distributed to up to ten IRS-qualified U.S. public charities;
  • Alternatively, a donor may recommend that a portion or all of the proceeds of the remainder interest be transferred to the Fidelity Gift Fund, the firm's Donor-Advised Fund, to establish an ongoing gifting program for those the donor designates to make grants over time from the Gift Fund to eligible charities.

References

External links