Pooled Timber Income Fund

Introducing the Pooled Timber Income Fund

Jun. 25, 2018
Trees arching overhead

The New England Forestry Foundation has created a new and game-changing charitable giving option for sustainably minded forest owners. Called the Pooled Timber Income Fund (PTIF), it not only offers landowners the opportunity to permanently protect their forests while receiving lifetime income and tax benefits, but also expands the use of Exemplary Forestry practices and opens up more forests for the public to enjoy.

After years of research, brainstorming and meticulous planning, we’re excited to fully unveil the Pooled Timber Income Fund and provide an in-depth look at a giving tool that will ultimately help maintain New England’s forested heritage.

Trees arching overheadAccording to Harvard Forest, New England has lost an average of 35 acres of forest to development every day since 1985. This has led to a decline in forests across all six New England states and has reduced carbon sequestration in New England forests by 90 percent compared to pre-1980 levels. These severe losses have led to a race to find solutions that help protect our forests, and the New England Forestry Foundation is helping to lead the charge.

These concerning statistics have motivated NEFF to not only undertake our new land conservation campaign (see page 3), but to also come up with additional options for private landowners who are considering permanent protection for their land. The Pooled Timber Income Fund, our most recent concept, is modeled on the traditional pooled income fund, which allows donors to contribute cash or other assets to a charity. The charity then invests the assets, and the income after expenses is distributed to the donors until their death, at which point the assets belong to the charity. Donors receive both a charitable tax deduction at the time of the initial donation and lifetime income.

Surprisingly, no other land trusts or conservation organizations have created a pooled income fund tailored to landowners, and so NEFF has taken on the challenge by applying the concept to land and timber rather than cash or other traditional assets.

How It Works

For a Pooled Timber Income Fund, landowners donate their land to NEFF, and the timber on that land to a pooled income fund set up and run by NEFF. Landowners receive shares in the fund proportional to the value of their timber donation. The fund manages the timber in accordance with NEFF’s green-certified, Exemplary Forestry practices. This type of forestry balances income generation with the long-term health of forests. As with the traditional pooled income fund, donors receive both an initial charitable tax deduction and lifetime income.

After expenses, the timber income is paid out to the beneficiaries—in most cases the land donors or their children—on an annual basis proportional to the shares held. Shares cannot be sold or transferred other than to successor beneficiaries named at the time of the donation.

Because timber is harvested in most years from one or more of the pooled properties, each member of the fund receives a more even stream of funding than they would if they managed their own land. There is also a reduced risk of loss from weather, insects, or other hazards, and reduced risk regarding timber prices due to the greater diversity of timber types and stand ages likely to be present in the fund.

On the death of the landowner’s beneficiaries, the landowner’s shares are transferred to NEFF. Over time, NEFF may extinguish shares to move timber rights out of the fund. The associated lands at that time would merge back with the woodlands in NEFF’s portfolio of Community Forests, the more than 140 properties across New England that NEFF owns and manages for the benefit of all New Englanders.

PTIF participants’ gift of forestlands carries far into the future: These permanently protected Community Forests will provide things like wildlife habitat and sustainably harvested wood for centuries to come, and because they are also free and open to the public, local residents of all ages can visit them to enjoy and explore the natural world.

To learn more about participating in the Pooled Timber Income Fund, contact Sophie Anthony at 978-952-6856 x122 or visit our PTIF page.

A PTIF Partnership

At the launch of the PTIF, both the New England Forestry Foundation and The Nature Conservancy are leasing timber to the fund. The Nature Conservancy’s leased timber comes from two properties in Massachusetts, the Bartholomew Farm and McElwain-Olsen Preserves, that include almost 300 acres of forest land. The Nature Conservancy will exclusively use its PTIF income to further the organization’s land conservation and stewardship work.

The New England Forestry Foundation forest management on Bartholomew and McElwain-Olsen is an opportunity to demonstrate how conservation and good forestry can work hand in hand. Both preserves were conserved by The Nature Conservancy for their ecological values, including limestone ledges and an important cold-water stream. On pre-harvest preserve walks, conservation staff will show how exemplary forestry will consider these and other ecological values, including forest carbon.

“We have more landowners in New England interested in conserving their forests than we have funding and tools to help them do it,” said Laura Marx, Forest Ecologist for The Nature Conservancy in Massachusetts. “We are excited to work with the New England Forestry Foundation as they launch this new tool and to inspire others by demonstrating how it works.”

McElwain-Olsen Preserve Preserve

Location: Arthur Pease Road, Middlefield, Mass. | Size: 62 acres | Open to the public; no trails

Perched on an east-facing slope in the southeastern corner of the Berkshire Mountains, this striking preserve features a picturesque hemlock ravine, diverse forest ecosystems, and a portion of Glendale Brook.

Barred Owl perched on a tree limb

The preserve was once farmed and pastured like much of western Massachusetts, and supports a diverse community of plants and animals including deer, Barred Owl, Ruffed Grouse, and American Black Bear. It is home to a beech forest studded with white pine and hemlock trees; a red maple swamp; and mixed deciduous forest. The ravine that descends into Glendale Brook is covered in mature hemlock forest and is made quite scenic by the mosses, ferns, and wildflowers that paint the preserve in color.

NEFF’s forestry will promote the growth of some of the healthiest trees on the preserve, and jump-start missing features including larger-diameter trees and downed wood.

Bartholomew Farm Preserve

Location: Sheffield, Mass., on both the east and west sides of Route 41 | Size: 424 acres | Open to the public; passive recreation and hunting encouraged

Bartholomew Farm Preserve is part of a larger network of Nature Conservancy lands called the Schenob Brook Preserve that protects a calcareous wetland in Sheffield. This type of wetland is extremely rare for Massachusetts, and the preserve has long been recognized as an important ecological site due to its concentration of rare species.

The Bartholomew Farm Preserve includes hayfields, hundreds of acres of northern hardwood forest, and a stunning calcareous cliff ledge along its informal trail network. NEFF will do a careful timber harvest on the forested portion of the Preserve, leaving an area to the west as untouched forest reserve. Both areas may be measured over time to better understand the ways forest reserves and carefully managed forests can continue to store increasing amounts of forest carbon.

Barred Owl photo by Shawn P. Carey (Migration Productions)