The Candy and Robert Hoffman Family Fund for Opera. Named Endowment Fund Proposal

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1 The Candy and Robert Hoffman Family Fund for Opera Named Endowment Fund Proposal

2 The Cleveland Orchestra respectfully requests that Candy and Robert Hoffman consider the creation of a named fund with a $1,000,000 contribution to The Cleveland Orchestra s Endowment. Named Funds reside within the Endowment in perpetuity and live as a lasting testament to the Fund s namesake, recognizing their support and commitment to The Cleveland Orchestra for generations to come. Often funds set the stage for a multi-generational family relationship with the Orchestra, as progeny honor the namesake and build their own interest in the Fund and the organization itself. The Cleveland Orchestra Endowment The Endowment is the life s blood of The Cleveland Orchestra; a healthy endowment will ensure that the Orchestra can maintain the world-class excellence for which it is renowned and continue to serve the greater Cleveland community and the world for future generations. The goal of the Orchestra through the Sound for the Centennial Campaign is to grow the endowment from 2 times the operating budget to between 5 and 7 times the operating budget. When successful, the Orchestra will have built a solid fiscal foundation that will render the institution secure from the fluctuations of the economy. Your gift also will set an example and encourage others to be equally philanthropic, thereby further enabling the Orchestra to reach its goal. Investment Policy The Cleveland Orchestra s Endowment assets are invested to maximize total return within acceptable risk parameters. Under the direction of the Investment Committee of the Board of Trustees, investments are made across a broad range of asset classes, utilizing both active and passive management strategies. The Investment Committee is advised by Monticello Associates, an independent asset management consulting firm. Endowment Draw Policy The Cleveland Orchestra s endowment draw is based on a total return philosophy. This allows the investments to be managed to maximize total return, within acceptable risk parameters, rather than just focusing on dividend and interest income. The Orchestra s draw policy is as follows: Prior year s draw amount weighted 70% plus 5% of the prior fiscal year s average quarterly market value net of investment fees weighted 30% plus 5% of the current fiscal year s cash contributions pro-rated based on the fiscal quarter received. The combination of the investment and draw policies is intended to have the endowment corpus grow over time while providing needed funds annually to support the Orchestra. Last Prepared for Candy and Robert Hoffman Page 2

3 year the Endowment Fund provided $6.7 million to support the Orchestra s $47.5 million operations. Establishing a Named Fund Gifts of $250,000 or more are entitled to establish a named fund within the Endowment. The named fund s value and dispersion records are kept by The Cleveland Orchestra and reported annually, following the Annual Meeting in November, to a Fund Custodian (or multiple Custodians) designated by the donor. Donors are free to create the wording of their named fund within the boundaries of the style guide of The Cleveland Orchestra for listing in performance programs and the Annual Report. Purpose The fund s draw may be unrestricted (to use however the Orchestra requires) or designated to support a variety of programs, artists, or activities of the Orchestra. While the Orchestra is suggesting that Candy and Robert Hoffman consider establishing a fund to support the Orchestra s opera activities, any other fund purpose you find desirable would be welcome. Possibilities include the following: Sustaining a Foundation of Excellence: Funds for Artistic Excellence include support for guest artists, guest conductors, Cleveland Orchestra musicians performing as the featured artist on a program, general support for our musicians, endowed chairs, support for orchestra performances at Severance and the Blossom Music Festival, and national and international touring. The Center for Future Audiences Removing all Barriers: Providing access to symphonic music is the hallmark of The Cleveland Orchestra s Future Audiences initiative to bring more music in more places to more people. The Center for Future Audiences exists to remove all practical, perceptual and experiential barriers to orchestra performance, allowing the power of music to transform the lives of a new generation of concert-goers. Funds may be established to support access programs for school children, university students, young professionals, senior citizens, the general public, broadcasts, recording, and on-line programs of the Center for Future Audiences. The Center for Music Education and Community Programs Setting the Standard for Education in the Arts: Education has been among the fundamental touchstones of our annual activities since the Orchestra s founding. This Center s endowment provides a funding base so that we can increase the scale and impact of the Orchestra s education and community engagement programs and, in doing so, increase the Orchestra s value to the community and ensure that we are worthy of ongoing philanthropic support. Funds for Music Education may support the Musical Rainbow series, education concerts, the Music Mentors program, and other initiatives of the Center for Music Education and Community Programs. Prepared for Candy and Robert Hoffman Page 3

4 The Center for Artistic Initiatives Producing the Finest Opera and Ballet in Cleveland, and Artistic Collaborations: At the heart of the Center for Artistic Initiatives lies The Cleveland Orchestra s commitment to produce collaborations with the world s greatest opera and ballet companies, including the Vienna State Opera and the Joffrey Ballet. For a fraction of the cost of maintaining resident companies in Cleveland, the Orchestra will produce the finest opera and ballet seasons available anywhere in North America. Named funds may support a variety of components that comprise the opera and ballet seasons, including full productions, specific artists, and sets and costumes. The Center for Artistic Initiatives will also support creative collaborations with other Cleveland cultural institutions. Innovative programs with partners such as the Cleveland Museum of Art, Playhouse Square, The Cleveland Playhouse and The Rock and Roll Hall of Fame will demonstrate the strength and vibrancy of Cleveland s arts infrastructure. Endowed funds supporting artistic collaborations may be created to encourage partnerships with Cleveland s other cultural gems. Ensuring Fiscal Stability: The Cleveland Orchestra is significantly undercapitalized. As seen on two occasions during the last decade, the institution does not have the wherewithal to weather major downturns in economic cycles. Recent major cost-cutting measures, combined with double-digit growth in annual contributed revenues, still yielded a current structural deficit of more than $8 million. The Orchestra in response has transformed the way it raises funds, shifting toward a comprehensive fundraising model in which annual fund, endowment, and legacy gifts ensure the health of the organization for generations to come. An unrestricted fund may be created to assist the Orchestra by providing support where it is most needed during any operating year. In the event that the supported Fund activity may not be relevant or produced in the future, alternative uses of the fund may be designated. All changes of purpose, if necessary, will be discussed and approved by the designated Fund Custodian. Fund Recognition In addition to the annual fund report that is sent to the Fund Custodian, funds of $250,000 or more are listed in the Endowment section of the Annual Report and performance programs at Severance Hall and the Blossom Music Festival. When appropriate, funds are also recognized in written materials or announcements in relation to the supported program or activity. Prepared for Candy and Robert Hoffman Page 4

5 Funds of $1 million or more receive special recognition in relationship to the supported program or activity; creators of such funds enjoy an annual opportunity to celebrate their fund by viewing or participating in the endowed endeavor. All contributions to the Endowment from July 1, 2009 through June 30, 2018 will qualify towards the $100,000 minimum needed for recognition on the Sound for the Centennial Campaign plaque in the lobby of Severance Hall. Finally, all fund contributors will be assigned a Leadership Gift Officer from The Cleveland Orchestra Development Department to steward their gifts and perform concierge services. Increased Gifts, Legacy Gifts and the Named Endowment Fund Funds are open to receive increased contributions through cash and or Legacy Gifts. Through increased giving, fund purposes may be redesignated (in consultation with the creator of the fund) to receive a higher level of recognition commensurate with the increased support that the fund provides. Payment Schedule The donor may designate a payment schedule of up to 7 years for the creation of the Fund. Upon commencement of the first payment the Fund will be recognized as part of the Cleveland Orchestra Endowment in concert programs and the Annual Report, and annual fund reports to the Fund Custodian will commence. Full fund recognition will begin when the draw from the fund produces an adequate amount to support the designated purpose. Conclusion Creating a named fund is a way to establish a permanent legacy with The Cleveland Orchestra, a means for ensuring that your gift to the Orchestra will continue giving through the many generations to come. Your creation of an endowed fund will also assist the Orchestra in fulfilling its commitment to being financially sound by the centennial year of 2018, with a strong endowment that enables the institution to be impervious to economic uncertainties. We invite you to consider making this meaningful commitment to the Sound for the Centennial Campaign and to the future of great music for our community and for the world. Please consider establishing The Candy and Robert Hoffman Family Fund for Opera as a permanent part of the Endowment of The Cleveland Orchestra. Prepared for Candy and Robert Hoffman Page 5