PIF administration overview
The combination of standard GiftWrap features and the Pooled Fund Administration (PFA) module of GiftWrap provides all the functions you need to administer a pooled income fund.
The basic pooled income fund administrative functions that you would need to perform throughout the year are described below. The functions available only if you have purchased the PFA module are indicated.
See also Pooled Fund Administration Order of Operations Over a Calendar Year for guidance on the order in which to perform certain operations over the course of a year and particularly at year end.
Set up the pooled income fund
1. Create the pooled income fund under Setup > Pooled Income Fund.
Fill in all of the fields in the Fund Identification and Fund Configuration sections. There is help available on each field.
Consult the fund's Instrument of Trust to answer most of the Fund Configuration questions, such as payment frequency, unitization method, and distribution method.
2. Open the Additional Information tab and fill in the Fiduciary Information and Additional Information sections. The values selected in the Additional Information section are informational only: they do not affect any calculations.
3. Open the Fund Beneficiary Info tab and fill in the Fund Income Beneficiary and Fund Remainder Beneficiary information. This information enables GiftWrap to produce income payments to the charitable sponsor of the pooled income fund when a participant dies, as well as a final distribution payment when a deceased participant's units are removed from the fund.
Create records for all of the fund's income beneficiaries, donors, and gifts
1. Create a person record for each income beneficiary of the fund. If you wish, you can create person records for fund donors who are not income beneficiaries, as well.
2. Add each gift that has been made to the fund and associate it with the person record of each of its income beneficiaries and donors. For each gift that you add, be sure to create check rows for each active beneficiary who is associated with the gift.
If a donor has added to a gift one or more times since the initial gift, record these subsequent gifts as additions to the original gift.
Unitize gifts (PFA module only)
GiftWrap's Unitize New Gifts function computes and stores units for any gift to the specified pooled income fund that has a gift date within the date range indicated. As a general rule, you will want to run this function after each valuation date of the fund, which might be monthly, quarterly, or even daily. The units assigned to each gift will depend on the unitization method used by the fund.
Record deaths and severances
Record the deaths of fund beneficiaries and the severance of gifts as you do for other gift types.
Note that if you have set up the fund with a Person Key For Remainderman, the Record Death function will link the remainderman as a Bene-R of a pooled income fund gift that terminates as a result of recording a beneficiary's death. Record Death will also create check rows for the remainderman so that the remainderman can receive a final income distribution from the gift and participate in an adjusting distribution, if appropriate. Severing a gift does not create a link to a remainderman under any circumstances.
Distribute fund income (PFA module only)
1. Make sure the you have added all new gifts and gift additions and recorded all deaths and severances for the current payment period. Do not record the deaths of any beneficiaries who died after the end of the period until you have finished distributing income for the period and updated the fund to the next period.
2. Run Distribute Income . Confirm that the Current Period and Current Year indicated for the fund in the Distribute Income window is correct (if not, see Update to New Period below).
This function distributes income among all of the fund's active income beneficiaries based on the units they currently hold. It also produces two detailed reports that document the distribution (see step (3) below).
3. Review the Distribute Income Detail - Person or Distribute Income Detail - Gift report carefully to confirm that the distribution is correct. We recommend that you print out at least one of these reports for your permanent records. These detail reports are available only while performing a distribution.
4. If the distribution looks correct, save the distribution.
Correct an error in a past distribution (PFA module only)
For any number of reasons, a fund may make an incorrect distribution in a particular payment period. The units to which the distribution was made may be incorrect, the amount distributed may be incorrect, or both.
Whatever the reason, you can correct the error in a subsequent income distribution by adjusting the individual amounts distributed. The amount of the adjustment equals the difference between what was distributed to each income beneficiary in the error period and what should have been distributed to each income beneficiary in the error period.
1. Make any corrections to the data so that all gifts, gift additions, deaths, and severances are correctly accounted for in the payment period during which the incorrect distribution was made.
2. Run Correct Past Distribution. Confirm that the Current Period and Current Year indicated for the fund in the Correct Past Distribution window is correct (if not, see Update to New Period below). Also, choose Add Distribution to Existing Payment Amounts in Current Period so that the corrective amounts you compute are added to the distribution amounts for the current period that you already recorded using Distribute Income (see Distribute fund income above).
3. Review the Correct Past Distribution Detail - Person or Correct Past Distribution Detail - Gift report carefully to confirm that the distribution is correct. We recommend that you print out at least one of these reports for your permanent records. These detail reports are available only while performing a distribution.
4. If the distribution looks correct, save the distribution.
Produce payments
1. Produce a PIF Payment Summary to review the payments you are about to produce to check for errors or omissions before you produce them. We encourage you to print this report out as a permanent record of the payments made. This report is available in the PFA module only.
2. Use GiftWrap's standard functions for printing checks and producing electronic funds transfer files to produce payments for a pooled income fund.
Update a fund to a new period (PFA module only)
The Distribute Income and Correct Past Distribution functions compute and record payment amounts for a fund's current payment period. You must update a fund to the next period before you can distribute income for that period.
1. After producing and sending all payments for the current period, run Update to New Period.
This function can update to the next period in the current year or period 1 of the next year, whichever you ask it to do.
Record and report K-1 tax information (PFA module only)
A pooled income fund administrator needs to provided tax information to the fund's income beneficiaries after the end of the year. GiftWrap can allocate this tax information among the beneficiaries and produce a report or a mail merge data file that contains this information.
1. Confirm that you have produced and sent all distributions for the tax year. You may want to produce a PIF Payment Summary for this purpose.
2. Update the fund into Period 1 of the next year.
3. Open the Fund Income Data tab and enter the total taxable income earned by the fund during the tax year by category, such as total US dividends, total corporate interest, etc.
4. Produce a K-1 Summary. This report will show you all of the tax information that will be reported to each fund income beneficiary on his or her Schedule K-1. Review the information in this report to confirm that it is correct.
5. Produce Federal K-1 tax forms and/or state tax forms for the states that require them (currently Massachusetts, California, and Connecticut).
5. If you plan to produce a substitute K-1 of your own devising, produce a secondary data file that contains each income beneficiary's tax information and is suitable for merging with your subsitute K-1 primary document.
Report state and federal tax withholding information (PFA module only)
Some administrators like to include a report of all taxes withheld when they send a fund's tax return to the IRS at the end of the year. Others like to include this information when they send a state tax payment to the state revenue department at the end of each payment period (to our knowledge, Massachusetts is that only state that requires withholding of state tax for pooled income fund beneficiaries who are state residents).
1. Run the Withholding Summary.
Update gift market values
It is important to update the market value of each fund gift at least once a year so that you can compute accurate FASB liabilities for each of these gifts. Some administrators also like to include current market value information on payment advices and/or in reports to their charity clients.
Whether you need to update fund gift market values once a year or more frequently, it is very easy to do.
1. Determine the value per unit of the fund as of the day for which you wish to determine the market value of each gift.
2. Run Compute PIF Market Values.
Report total units and market value held by each gift (PFA module only)
You can produce a report of the total units and current market value assigned to each of a fund's gifts at any time.
1. Run the Account Summary