The Community Foundation’s primary investment goal is to generate the maximum long-term total return on its assets within prudent levels of risk. Investments are designed with the objective of preserving or enhancing the real (inflation adjusted) purchasing power of the Funds of the Foundation, while producing a relatively predictable and stable payout stream to enhance the Community Foundation’s ability to advance the quality of life in our service area. The distribution policy of the Foundation is currently 5% of the average market value of the Funds, extending to a maximum of sixteen trailing quarters.
The primary objective of the investments for the Foundation is to provide long-term growth of principal and income without undue exposure to risk as measured by the CPI + 4%. In addition, the Committee has established secondary objectives whereby it is expected that each asset class exceeds the returns of a specified benchmark with a lower risk profile than the benchmark.
The Board and Committee recognize that asset allocation decisions will be the single most important determinant of portfolio risk and return. Thus, it is the Committee’s responsibility to set long-term asset allocation ranges and review them regularly with the Board. Investment consultants and/or managers shall advise the Finance and Investment Committee if the parameters provided in this policy are inappropriate to achieve the Board’s investment objectives. Rebalancing of the allocation of assets shall be considered at least annually by the Finance and Investment Committee during the first quarter of each fiscal year to insure that such allocation is within policy guidelines.
Charitable Funds intended to last, specifically endowments or permanent funds, must be cautious about their spending. As a good long-term steward, ECCF invests those Funds with two objectives:
- To produce long-term growth of assets while preserving their real-dollar value.
- To produce income for use according to the intent of the donors.
Therefore, ECCF’s spending policy is to use about 5% of the value of the Fund principal each year.
- The 5% may be adjusted slightly from time to time as conditions change.
- The annual distribution is calculated after the close of the fiscal year on July 1.
- The distribution may be spent, saved to accumulate for a large project, or returned to principal, as the donor wishes.
- The principal on which the distribution is based is the average of the 16 trailing quarters, a time span greater than most market cycles, calculated to smooth out economic fluctuations over time and provide a relatively steady spendable flow.