The Advantage of Investing with the Community Foundation
The Foundation provides the opportunity for donors to pool funds. This permits their investment in potentially higher return investment instruments and reduces investment risk through broader investment diversification beyond that which most donors could achieve on their own.
Investment Philosophy
The overall investment philosophy is to maximize the “total return” on Community Foundation assets while limiting investment risk consistent with donor fund type and distribution requirements. Given the charitable nature and purpose of these assets, the Community Foundation intentionally has a conservative investment bias. The investment return objective is dependent on the nature of the asset involved.
Administration of Donor Funds
The donor funds administered by the Community Foundation are either invested in a short-term or long-term investment portfolio depending on the nature of the respective donor fund and its planned life. The Board of Directors sets investment policy for donor funds and appoints an Investment Committee to execute its policy and to develop supporting guidelines. The Investment Committee is comprised of six or more community leaders who are knowledgeable investors that meet on a quarterly basis to review investment performance and to direct any investment changes.
Investment Portfolios
Charitable Funds
Generally speaking, Charitable (non-endowed) Funds are invested in short-term investments allowing for use of all or part of the monies for charitable purposes and projects. These funds are invested in a portfolio known as Model A. This is a short-term investment portfolio and consists of a bank checking account, money market account, and laddered bank certificates of deposit of terms up to five years and may include a bond index mutual fund. The investment goal is to exceed the annual rate of inflation, at a minimum.
Endowment Funds
An endowment is intended to be a permanent charitable resource which generates annual earnings. Grants are then made from the available money to accomplish donors’ charitable goals. These funds are invested in a portfolio known as Active Growth Portfolio. This is a long-term investment portfolio and consists of a mix of fixed income investments (approx. 40%) and equity investments (approx. 60%). The fixed income investments consist of laddered bank certificates of deposits (terms greater than 1 year to 5 years) and a bond index mutual fund. The equity investments are diversified over several equity mutual funds with differing investment focuses. The investment goal is to exceed the annual rate of inflation by a minimum of 2% with a longer-term target of a gross annual return of 7-10% prior to deducting a nominal annual administrative fee.
Other investment portfolios are available and include a more conservative approach as well as a more aggressive approach than the Active Growth Portfolio described above.
To learn more about our investments, there is a user-friendly publication called, “Overview of Investments – Empowering Endowments.”
Audit and 990
Click here to view the June 2018 18-month Audit or here to view the 2017 IRS Form 990.
Contact Charla Schafer, Executive Director, for additional information or to obtain a copy of the Investment Policy & Supporting Guidelines.