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The Virginia Interfaith Center Endowment
We invite you to learn more about our growing endowment which ensures the work of the Center continues for generations of to come. A lasting tax-deductable legacy through your gifts will mean justice and compassion is always present at Virginia's General Assembly and throughout our Commonwealth. The common wealth depends on us.
Learn about:
- Faith Street meets State Street Fund, honoring Fletcher Lowe <click>
- Grace and Love Proclaimed Fund, honoring Hanover Avenue Christian Church <click>
General Endowment Purpose
The Virginia Interfaith Center Endowment has been established to help provide necessary operating funds for the Center to achieve its mission. Periodic distributions from the Endowment will be used to supplement the Center’s budget.
Stock Transfer Information:
If you prefer to transfer stock or equities to the Center, you may simply refer the following information to your broker or call the office for more transfer details.
Account is held at Charles Schwab
DTC Number - 0164 Code 40
Account Name - Virginia Interfaith Center
Overview
Assets of the Endowment are owned by the Virginia Interfaith Center for Public Policy, a 501 C (3) non-profit corporation, and are under the control of the Board of Directors. The Board has ultimate authority over and responsibility for accepting donations, adhering to agreed conditions, arranging prudent custody of the assets, setting guidelines for the management of the funds that are consistent with the mission & needs of the Center, making decisions for the investment of the funds, choosing service providers, authorizing payment of any fees & commissions, monitoring the operation of the Endowment, authorizing distributions from the funds to the Center, and all other functions of the Endowment’s administration.
Policy
The Endowment is administered to attempt to preserve inflation-adjusted value, after distributions, in order that it can provide effective support for the Center indefinitely. Recognition is given to the limited resources of the endowment. Therefore, assets will be invested with the primary goal of safety of principal with the secondary goal of generating a satisfactory total return (growth & income) over realistic time periods (typically, two to three years).
No indebtedness should be incurred by the Endowment. Specifically, no part of the Endowment will be pledged, hypothecated, encumbered or otherwise used as collateral and no short-selling or margin-buying is allowed.
Operations
The Finance Committee of the Board advises and assists the Board in administering the Endowment.
The Board expects the Finance Committee to provide ongoing recommendations for asset allocation, investment vehicles and/or choice of outside managers. The finance committee monitors progress of the investments and reports to the Board, both regularly and as needed. Other details that accompany administration of an investment portfolio, such as proxy voting, are also addressed by the Finance Committee.
As a practical matter, the employee Staff of the Center is involved with operations of the Endowment. Depositing contributions, collecting & reconciling periodic statements, preparing reports, etc. are examples of tasks which the Board delegate to Staff. Questions about the endowment, stock transfers, or bequests should be directed to office@virginiainterfaithcenter.org.
Proposed donations with accompanying restrictions are reviewed by the Board before acceptance. Generally, restriction on any asset should not affect the investment or use of other assets in the Endowment, but, in any case, restrictions must be approved by the Board before including the affected asset(s) in the Endowment.
“Gifts in kind,” including stock transfers, are anticipated and are normally sold as soon as practical, with proceeds included as part of the regular portfolio. Otherwise, the Board’s records should reflect its decision to hold the asset.
The Board is empowered to choose service providers such as banks, brokers, investment managers and consultants. Decisions of the Board come from the recommendations of the Finance Committee.
Potential conflicts of interest, or appearances thereof, between service providers and parties related to control of the Center are to be avoided rigorously.
Spending Policy
Over the long-term, the Endowment will generate maximum “spendable” funds, while maintaining the inflation-adjusted value of the donations and retaining an appropriately moderate risk posture.
Determining the amount of “spendable income” available is a difficult and inexact exercise. There are several factors which can negate the efficacy a traditional, straightforward calculation and subsequent payout of dividends, interest and capital gains. These factors include varying inflation, fluctuating markets, inevitable unrealized capital losses, macro-trend changes in dividend policies & interest rates, and changes in portfolio asset allocation. The result of these factors brings into question not only the proper payout which will maintain purchasing power; the factors also will cause a traditional calculation to result in widely fluctuating annual amounts to be distributed. A more predictable payout plan is highly desirable for The Center’s planning purposes.
Recognizing the above, the Endowment will take a “total return” approach to determining annual payouts. This method has been widely employed in recent years by other endowments as well as trusts and foundations. The idea is to estimate a realistic, long-term, inflation-adjusted overall return expectation, and base future payouts on that estimate. Of course, in any single year, the payout will likely be higher or lower than the total return that is actually experienced. Over longer periods, the payout policy should approximate total portfolio returns; if not, the figure will be adjusted by action of the Board.
Historic results of large samples of prudently-invested portfolios suggest a realistic long-range spending policy is 4% of the market value of assets. In order to achieve more stability of the distributions and to lessen disturbances to the portfolio, the market value comprising the denominator of the computation shall be the arithmetic average of the most recent three fiscal-year-end values.
Annually, during the month following the fiscal-year-end, the Board, aided by review and recommendations from the Finance Committee, shall determine the distribution to the Center for the current year. It is expected that the 4% guideline will be customary; however, if any 12-month payout is to exceed the guideline, the excess amount distributed must be approved by consent of the Board.
Guidelines for Investment
Management of the assets follow a balanced, diversified, high-quality approach when viewed in its entirety. Illiquid investments, speculative investments, non-rated fixed income investments (and fixed income rated below investment grade), and high concentrations of any single investment sector are avoided. Also to be avoided is investment in any company which emphasizes operations that are counter to the mission of the Center. While no specific allocations, prohibitions or requirements are imposed, management is consistent with a “prudent expert” approach, such as is applied to the management of ERISA governed retirement assets, with primary emphasis on controlling overall portfolio volatility (risk).
Typical investment vehicles might include, but not be limited to: FDIC insured deposit accounts, money market funds, other mutual funds, US large-capitalization equities, US dollar-denominated international securities, US treasury & agency securities, and corporate fixed income rated BBB/Baa or better. Since the Endowment’s income is not taxed, tax-advantaged investments are generally not appropriate. Asset allocation is not specifically set, but should be a starting-point focus all investment reviews and consistent with the objectives of the Endowment
Generally, fixed-income investments are to be used to generate the bulk of the annual cash spending needs (as well as providing stability for the portfolio), and equity investments to address the growth in value needed to maintain “real purchasing power,” i.e., to neutralize inflation.
Standards of Investment Performance
Investment results should be reviewed over longer periods (three years) and shorter intervals (quarterly) in order to evaluate the effectiveness of strategy and management. The basis for performance is “total, time-weighted rate of return,” as is customary for other institutional funds. Over three-year periods, the Endowment seeks to achieve its primary goal of a 4% rate of return, in excess of inflation (consumer price index), while experiencing only moderate volatility, arbitrarily set as less than two-thirds the volatility of the stock market. Volatility, in this case, is defined as the standard deviation of quarterly total investment returns of the Endowment compared to a similar measurement for the S&P500 Stock Index.
Secondarily, returns of component asset classes are measured against comparable and appropriate indices. Such “relative comparisons help to evaluate the management of each segment of the portfolio. The return for the domestic equity component, for instance, is compared to the S&P500 Stock Index return. If international equities are included, the comparison is the EAFE Index. The bond component is compared to the Lehman Aggregate Index. Short-term investments (cash reserves) should compare with 91-day US Treasury bills. Such comparative measurements should be made following each fiscal quarter for 3-month, year-to-date and trailing 3-year periods.
Reporting
The Finance Committee shall compile and report investment results and comparisons to the Board. A summary 3-month update should be presented for “off” quarters and a complete report of short-term and long-term results should be made annually.
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