ELCA Pooled Income Fund Disclosure Statement - 2007-2008

The ELCA Foundation receives and administers gifts to the Evangelical Lutheran Church in America in the form of pooled income funds.  Gifts of cash, real estate and other appreciated assets are accepted to fund a pooled income fund.

The ELCA Pooled Income Funds have given donors the opportunity to make gifts to support the ministries of Jesus Christ.  A gift to a pooled income fund does not require the larger gift needed for an individual charitable remainder trust, but it does maintain its advantages: receiving a charitable contribution tax deduction based on age, bypassing capital gains tax on appreciated property and receiving an income for life.  By 'pooling' smaller gifts together from many donors the ELCA Foundation is able to combine the gifts of many for the benefit of all.

This brochure is intended to explain some of the practical matters of the pooled income funds. It also serves as a Disclosure Statement to comply with the Philanthropy Protection Act of 1995. If you have other questions contact your ELCA Foundation Regional Gift Planner or call  the Foundation office in Chicago at 1-800-638-3522 (ext. 2970).

ELCA Pooled Income Funds
The ELCA Foundation was established in 1988 upon the merger of the Lutheran Church in America, the American Luther Church and the Association of Evangelical Lutheran Churches to form the Evangelical Lutheran Church in America. 

The ELCA Foundation currently maintains five pooled income funds with a combined market value on Jan. 1, 2007 of $2,746,758 involving 117 contracts. 

The ELCA inherited three funds from the former American Lutheran Church (ALC).  As of Jan. 1, 2007 those three funds had a combined market value of $164,482 and involved 15 contracts.  The assets for these three funds are invested with the ELCA Board of Pensions, Minneapolis, Minnesota, with accounting and reporting support by the ELCA Foundation in Chicago.  It is the intention of the ELCA Foundation to close out the three inherited ALC funds by maturation and not add additional assets or gifts to those funds.

The ELCA inherited two funds from the former Lutheran Church in America (LCA) and continues to use those funds as its pooled income fund program.  As of Jan. 1, 2007 the market value for Pooled Income Fund #1 was $1,276,454 and involved 36 contracts.  As of Jan. 1, 2007 the market value for Pooled Income Fund #2 was $1,305,822 and involved 66 contracts.

The ELCA Foundation continues to add new gifts made for pooled income funds into those funded invest and managed by Wachovia Bank and the following information applies only to those funds.

Payout Schedules
Payouts from the funds are made quarterly, with checks being mailed from Wachovia Bank.

Payout Percentages
Payout yields are dependent on the performance of the various pools.  The equity funds being used have averaged about 1% payout per year over the past four years.  The current yield of the bond fund is in keeping with the experience of bond funds in general is currently just below 5%.

Pooled Income Documents
The ELCA Foundation provides documentation to Wachovia Bank of all gifts made to the pool income funds (PIF).  At the end of that calendar month Wachovia calculates the unit value in the fund and assigns the number of units for the new gift.  Wachovia enters the PIF units on the document and returns it to the ELCA Foundation.  The Foundation has the appropriate persons sign the document and returns a signed copy to the donor.

Pooled Income Fund Payout
All payouts from the pooled income funds are passed upon the number of PIF units an individual account holds.  The quarterly income is distributed pro-rata amongst the the PIF units.

Charitable Beneficiaries
With charitable trusts in which the ELCA serves as trustee 70% of the charitable remainder value must be designated to ELCA ministries (churchwide, synodical, congregational or institutional).  Up to 30% of the charitable remainder value may be donor designated to non-ELCA not-for-profit charities which are IRS approved (501(c)(3)).

Minimum Gifts
The minimum gift to an ELCA Pooled Income Fund is $2,500.00.  Additional gifts may be made to pooled income fund accounts in the future for the same minimum amount.

Giving Cash
Cash gifts in the form of checks are recorded as gifts on the date of the postmark on the envelope received by the ELCA Foundation, or the date the check is personally handed to an ELCA Foundation representative.

Giving Publicly Traded Securities
Gift value of stocks is determined by averaging the high and low for that stock on the gift date. The gift date for stock gifts is the date of the postmark on the envelope received by the ELCA Foundation, or the date the stock certificates and stock powers are personally handed to an ELCA Foundation representative or the date that securities are transferred into an ELCA account. The donor also needs to supply the ELCA with the cost basis of the stock and terms of ownership.

If securities are held by the donor in "street name" with a broker, they can be wire transferred from the donor's account to the ELCA account. Ask The Foundation for wire transfer procedures. The gift date of the stock for gift value purposes is the date it is transferred into The Foundation's account.

Giving Real Estate or Closely Held Stock
The initial fair market value of real estate or closely held stock placed in a pooled income fund is determined by a qualified appraisal at the time of the gift. An appraisal must be completed no more than 60 days prior to the gift date. The date of the gift is the date the deed is recorded or the date the stock is transferred.

For real estate gifts, the amount eventually invested in the pooled income fund will be the sale price, less sales expenses, advances and commissions.

When Appraisals Are Needed
The appraisal of real estate property or closely held stock is the responsibility and expense of the donor. Appraisal guidelines will be made available by the ELCA Foundation. An IRS Form 8283 provided by the ELCA Foundation must be completed by the donor and the qualified appraiser. The appraiser must include a description of the property and the appraised market value on the Form 8283. The ELCA Foundation, after completion of its section on Form 8283, will return the original form to the donor to be included with the donor's income tax return.  The ELCA Foundation will file Form 8282 with the IRS upon liquidation of real estate assets to provide the sale price.

The appraised value of real estate property or closely held stock becomes the gift value. The sale value, impacted by the real estate market in a given geographical area, may be less or more than the appraised value. If the sale value is significantly lower than the appraisal, the charitable tax deduction may need to be recalculated.

Depreciation of real estate lowers the cost basis. If the accelerated depreciation method rather than the straight-line option has been utilized, depreciation recapture may apply. For additional information consult a tax advisor.

Two-Year Rule
Unsold gift property which is in a pooled income fund for more than two years may be discounted in value to more closely relate to current sale offers and a new appraisal may be necessary. Gift property sold at a substantially discounted rate within two years of the gift date may require the donor to file an amended tax return for the year the property was gifted.

Environmental Questionnaire
An environmental questionnaire will be required for all real estate gifts.  If the questionnaire reveals serious concerns, the gift property may need to be rejected as a potential charitable gift. A Phase I survey or full inspection may be required at the donor's expense.

Tax Deductions and Annual Tax Reports
Figuring the tax deduction for a pooled income fund involves the payout yield for the last three years of the fund as well as the ages of the individual income beneficiaries.

A gift and tax letter will be prepared by the ELCA Foundation at the time of the gift. The income beneficiary will receive the IRS form K-1 annually which is needed for the income beneficiaries' income tax return. Generally the IRS form K-1 will arrive by mid-February to mid-March but is legally required to arrive no later than April 15.

Donors cannot deduct an unlimited amount of charitable contributions for income tax purposes in any one year. There are limitations based on the donor's adjusted gross income. The donor, however, must use as much of the tax deduction as possible in the current year of taxation. The tax deduction may NOT be averaged to spread its benefit over several years.

Total charitable contributions are deductible up to 50% of a donor's adjusted gross income. Amounts exceeding 50% may be carried over for up to five additional years. These carryovers are subject to the same limitations listed above.

Gifts of appreciated assets are deductible up to 30% of a donor's adjusted gross income. Amounts exceeding 30% may be carried over for up to five additional years. These carryovers are subject to the same limitations listed above.

ELCA Foundation Management Fees
The ELCA annual management fee for pooled income funds is 1.0% (100 basis points).  The fee is determined on the basis of the pool's net fair market value determined annually.  The fee is charged quarterly against the principal and the income of the pool.  The annual management fee may increase in the future if there is an inflation of costs in trust management.

The fee for administration and management is all-inclusive, covering the cost of the  documents, accounting and recording payments to the beneficiaries, monthly reports, IRS reports and the annual IRS form K-1.

Commissions
No commissions are paid to ELCA Foundation representatives and compensation is not based on the number or value of gifts.

Disclaimer
Charitable Pooled Income Funds and their invested assets are exempt from the registration requirements of the federal securities laws, pursuant to the Philanthropy Protection Act of 1995 which exempts collective investment funds and similar funds maintained by charitable organizations.

Prospective donors to an irrevocable charitable pooled income fund are advised to consult with their attorney or tax advisor.  This brochure is not intended as legal or tax advice.

The Evangelical Lutheran Church in America Foundation takes your right to privacy very seriously.  We gather non-public personal information as we meet with you regarding your gift planning.  The ELCA Foundation protects that information and provides access only as needed to fulfill the agreements we have with you, or as you have instructed.  We do not, nor ever will, share, sell, or otherwise compromise your personal non-public information.