THE OREGON COMMUNITY FOUNDATION Endowment Partners 101 Enter the Title of Your Presentation Here
September 28, 2016 Agenda • Community foundations • The Endowment Partners Program • Definition of endowment • Investment Program Break • Fund administration – Statements – Fees – Distributions – Additions • Planned giving support www.oregoncf.org
What and who is The Oregon Community Foundation? www.oregoncf.org
Community Foundations Wikipedia: Instruments of civil society designed to pool donations into a coordinated investment and grant making facility dedicated primarily to the social improvement of a given place. www.oregoncf.org
The Oregon Community Foundation Mission To improve lives for all Oregonians through the power of philanthropy. Publicly supported 501(c)(3) Donors • Individuals • Families • Businesses • Nonprofit organizations www.oregoncf.org
Many types of funds Discretionary Community Donor Advised Scholarship Designated www.oregoncf.org
Designated Funds The grantees are designated at the time the fund is established. www.oregoncf.org
Two Types Donor Designated Fund Donor = Individual = Business = Organization Donor Grantee www.oregoncf.org
Two Types Agency Endowment Fund Donor = 501(c)(3) Public Charity Donor = Grantee www.oregoncf.org
Endowment Partner Funds Primary Benefits • Access to investment expertise • Create efficiencies • Access to planned giving advice and services • Advice on complex gifts www.oregoncf.org
Endowment What does it really mean? Long-term fund created to support an organization www.oregoncf.org
Endowment T wo Considerations: • Creation – Donor? – Board of directors? • Use – Income stream? – Rainy day fund? www.oregoncf.org
Endowment True Endowment = Donor Restricted • Obligated to maintain in perpetuity • Cannot fully expend in the short term • Annual income stream • Revenue diversification • Additional restriction to use of income • OCF maintains arm’s length www.oregoncf.org
Endowment Board Designated “All boards distrust their successors.” Jerry Westersund Board Designated = Emergency Reserve www.oregoncf.org
Endowment OCF’s Definition • Fund maintained in perpetuity • Annual income stream • Goal = to manage the fund in a prudent manner as to not exhaust in the long term Model Considers • Investment • Expenditure www.oregoncf.org
Investment Policy Objective To retain (at a minimum) the purchasing power of the funds, while producing a reasonable return for distribution to meet current community needs. www.oregoncf.org
Spending Policy • Board reviews rate annually • Investment c ommittee’s 10 projection • Target 9% return – If 9% or higher 5% payout rate – If below 9% 4.5% payout rate • Basis = 13 quarter trailing average of market values www.oregoncf.org
Investment Program Overview www.oregoncf.org
Investment Committee William Berg, Chair, Portland Lyn Hennion, Medford Karen Harding, Portland Chris Magana, Portland Tim Mabry, Board Chair Hermiston Duane McDougall, Board Member Lake Oswego William Moffat, Portland Garth Nisbet, Portland Ronald Parker, Portland Eric Parsons, Portland William Rutherford, Portland Lane Shetterly, Board Member Dallas Benjamin Whiteley, Portland Duncan Wyse, Board Member Portland www.oregoncf.org
Endowment Investment Model Three tenets – High allocation to equities is generally required for most spending levels. – Broad diversification mitigates risk inherent with high equity allocation – Fixed income supports spending during periods of prolonged economic contraction or deflation. www.oregoncf.org
Main Investment Pool Allocation June 30, 2016 www.oregoncf.org
Social Investment Pool Allocation June 30, 2016 www.oregoncf.org
Why Equities? www.oregoncf.org
Volatility Matters www.oregoncf.org
T wenty-three-year growth of an Endowment Partner Fund 1993-2015 www.oregoncf.org
Investment Returns for periods ended June 30, 2016 Trailing Trailing Trailing Trailing Quarter 1 Year 3 Years 5 Years 10 Years Main Investment Pool OCF 1.4% -3.4% 4.1% 3.8% 4.5% OCF Custom Benchmark 1.3% -2.8% 3.7% 3.4% 3.5% Social Investment Pool OCF 1.1% 0.6% 6.4% 5.9% OCF Custom Benchmark 1.3% -0.5% 5.9% 5.5% Returns are net of investment management costs www.oregoncf.org
Market Update Cambridge Associates 2016 To Date – End of 2015 drop • China markets & oil plunge • Q1 = -0.7% – Brexit at end of Q2 • Flight to US Equities (overvalued) – Uncertainty • Europe reaction to Brexit • U.S. elections • Monetary policy – Low return environment • All asset classes • Global economy www.oregoncf.org
THE OREGON COMMUNITY FOUNDATION Endowment Partners 101 Enter the Title of Your Presentation Here
Fund Administration Statements Fees Distributions Additions www.oregoncf.org
www.oregoncf.org
Fee Schedule Endowment Partner Funds Up to $1 million .50% Next $4 million .20% Above $5 million .10 % www.oregoncf.org
Planned Giving Julie Gregory Philanthropic Advisor & Regional Director Central & Eastern Oregon www.oregoncf.org
How Life Income Gifts Work www.oregoncf.org
Thank you for coming! The slide deck can be found at oregoncf.org/donors/endowment-partners www.oregoncf.org
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