THE OREGON COMMUNITY FOUNDATION Endowment Partners 101 Enter the Title of Your Presentation Here
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
What and who is The Oregon Community Foundation?
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.
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
The Oregon Community Foundation Many types of funds Discretionary Community Donor Advised Scholarship Designated
Designated Funds The grantees are designated at the time the fund is established.
Two Types Donor Designated Fund Donor = Individual = Business = Organization Donor Grantee
Two Types Agency Endowment Fund Donor = 501(c)(3) Public Charity Donor = Grantee
Endowment Partner Funds Primary Benefits Access to investment expertise Create efficiencies Access to planned giving advice and services Advice on complex gifts
Endowment What does it really mean? Long-term fund created to support an organization
Endowment Two Considerations: Creation Donor? Board of directors? Use Income stream? Rainy day fund?
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
Endowment Board Designated All boards distrust their successors. Jerry Westersund Board Designated = Emergency Reserve
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
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.
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
Investment Program Overview
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
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.
Main Investment Pool Allocation December 31, 2016
Social Investment Pool Allocation December 31, 2016
Why Equities?
Volatility Matters
Twenty-four-year growth of an Endowment Partner Fund 1993-2016
Investment Returns for periods ended December 31, 2016
Market Update Cambridge Associates 2016 1 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
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
THE OREGON COMMUNITY FOUNDATION Endowment Partners 101 Enter the Title of Your Presentation Here
Fund Administration Statements Fees Distributions Additions
Fee Schedule Endowment Partner Funds Up to $1 million.50% Next $4 million.20% Above $5 million.10 %
Deferred Giving Diane Lai Philanthropic Advisor dlai@oregoncf.org
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
How Life Income Gifts Work
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
Thank you for coming! The slide deck can be found at oregoncf.org/donors/endowment-partners