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

2 February 15, 2017 Agenda Community foundations The Endowment Partners Program Definition of endowment Investment Program Break Fund administration Statements Fees Distributions Additions Deferred 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 lives for all Oregonians through the power of philanthropy. Publicly supported 501(c)(3) Donors Individuals Families Businesses Nonprofit organizations

6 The Oregon Community Foundation 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 distrust their successors. Jerry Westersund 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 year 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

19 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

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, 2016

22 Social Investment Pool Allocation December 31, 2016

23 Why Equities?

24 Volatility Matters

25 Twenty-four-year growth of an Endowment Partner Fund

26 Investment Returns for periods ended December 31, 2016

27 Market Update Cambridge Associates st 19 days, China meltdown Oil decline Low return environment All asset classes Low global growth Brexit at end of Q2 November Election of Donald Trump OPEC cut of oil production Energy stabilized eoy

28 Market Update Cambridge Associates 2017 Highly uncertain investment environment Protectionism & de-globalization Impact of Trump administration s fiscal & trade policies European elections Netherlands, France, Germany, Italy

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

30 Fund Administration Statements Fees Distributions Additions

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

33 Deferred Giving Diane Lai Philanthropic Advisor

34 Deferred Giving What is a deferred gift? A deferred gift is any gift that will result in a gift to a nonprofit after a term of years or after the donor s death. Deferred gifts fall into 2 broad categories: Bequests Life Income Gifts

35 How Life Income Gifts Work

36 Our Partnership Gift Type Charitable Gift Annuity (CGA) Minimum Designation of Residuum/Remainder Notes Gift $25,000 Residuum designated to nonprofit Minimum age of the annuitant is 60 partner to add to an existing EP Fund 55 and older eligible to set up Create a new EP Fund, if residuum deferred CGA meets current funding amount No fee Charitable Remainder Trust (CRT) $100,000 For OCF to serve as trustee, 50% of the charitable remainder value must be designated to nonprofit partner to add to an existing EP Fund Remaining 50% may be distributed directly to nonprofit partner New EP Fund may be created if the net present value of the remainder interest for OCF is greater than or equal to the current fund minimum ($25K) Minimum age of beneficiary is 55 Payout percentage to beneficiary between 5% and 7% Fees for preparation of trust document Expenses related to carrying costs of unmarketable assets prior to their sale Administrator fee approximately 80 bps annually

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