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[[underlined]] Smithsonian Institution Pooled Income Fund [[/underlined]]

With Regents' approval, it has been determined that the Smithsonian undertake to increase unrestricted endowment to at least $50 million in the next ten to fifteen years.  As one means toward this end, it is proposed that the Smithsonian establish a Pooled Income Fund.

Such charitable remainder trusts, approved by the 1969 Tax Reform Act, are now widely used in deferred giving programs of other not-for-profit organizations.  The Smithsonian is currently the beneficiary of two other forms of deferred gifts, a Unitrust and an Annuity Trust which are generally applicable for donations in excess of $100,000.  The creation of a Pooled Income Fund which would accommodate smaller contributions, can be expected to prove attractive to a broader spectrum of potential supporters.

A Pooled Income Fund permits a donor to contribute cash or non-tax-exempt securities to the fund while at the same time retaining a lifetime interest income for the donor or a named beneficiary.  At the death of the donor, or the income beneficiary, the assets attributable to the donor's gift would be withdrawn from the fun and transferred to the Smithsonian.

In its operation, such a fund is similar to a mutual fund, although, of course, once a gift is made it cannot be withdrawn.  The dividend and interest income of the Fund is distributed quarterly to the donors and income beneficiaries, proportionate to their original contributions.  It is the intent of the Smithsonian that this income be at the annual rate of