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1 THE OREGON COMMUNITY FOUNDATION Endowment Partners 101 Enter the Title of Your Presentation Here

2 March 3, 2016 Agenda Community foundations The Endowment Partners Program Definition of endowment Investment Program Break Fund administration Statements Fees Distributions Additions Planned giving support

3 What and who is The Oregon Community Foundation?

4 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.

5 The Oregon Community Foundation Mission To improve life in Oregon and promote effective philanthropy. Publicly supported 501(c)(3) Donors Individuals Families Businesses Nonprofit organizations

6 Many types of funds Discretionary Community Donor Advised Scholarship Designated

7 Designated Funds The grantees are designated at the time the fund is established.

8 Two Types Donor Designated Fund Donor = Individual = Business = Organization Donor Grantee

9 Two Types Agency Endowment Fund Donor = 501(c)(3) Public Charity Donor = Grantee

10 Endowment Partner Funds Primary Benefits Access to investment expertise Create efficiencies Access to planned giving advice and services Advice on complex gifts

11 Endowment What does it really mean? Long-term fund created to support an organization

12 Endowment Two Considerations: Creation Donor? Board of directors? Use Income stream? Rainy day fund?

13 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

14 Endowment Board Designated All boards fear future boards. - Ted Kaye Board Designated = Emergency Reserve

15 OCF s Definition Endowment 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

16 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.

17 Spending Policy Board reviews rate annually Investment committee 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

18 Investment Program Overview Board of Directors Independent Auditor Investment Committee Investment Consultant Main Pool Investment Managers Social Pool Investment Managers

19 Investment Committee William Berg, Chair, Portland Patrick Criteser, Board Member, Tillamook Lyn Hennion, Medford Karen Harding, Portland Duane McDougall, Board Member, Lake Oswego William Moffat, Portland Garth Nisbet, Portland Ronald Parker, Portland Eric Parsons, Portland William Rutherford, Portland Benjamin Whiteley, Portland Robert Wulf, Portland

20 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.

21 Main Investment Pool Allocation December 31, 2015

22 Social Investment Pool Allocation December 31, 2015

23 Volatility Matters

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25 Investment Returns for periods ended December 30, 2015 Trailing Trailing Trailing Trailing Quarter 1 Year 3 Years 5 Years 10 Years Main Investment Pool OCF 2.4% % 4.5% 4.9% OCF Custom Benchmark 2.3% % 3.8% 3.8% Social Investment Pool OCF 5.0% % 6.4% OCF Custom Benchmark 3.5% % 5.8% Returns are net of investment management costs

26 Market Update Cambridge Associates Fourth Quarter 2015 US Federal Reserve announced first rate increase since financial crisis. European Central Bank expanded quantitative easing. Brief global rally in October fizzled in November & December Q4 best for developed markets in 2 years S&P 500: 7% European Monetary Union: 6.5% Japanese equities: 9.8% Emerging Markets: trailed at 1.6% January 2016 equity markets off to very rough start. Global fears regarding China s economy Drop in oil prices

27 THE OREGON COMMUNITY FOUNDATION Endowment Partners 101 Enter the Title of Your Presentation Here

28 Fund Administration Statements Fees Distributions Additions

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30 Fee Schedule Endowment Partner Funds Up to $1 million.50% Next $4 million.20% Above $5 million.10 %

31 Planned Giving Wendy Usher Regional Director of Development Portland Metro

32 Charitable Gift Annuity

33 Thank you for coming! The slide deck can be found at oregoncf.org/donors/endowment-partners