THE OREGON COMMUNITY FOUNDATION Endowment Partners 101 Ente r the T itle o f Yo ur Pre se nta tio n He re
Klamath Falls July 12, 2017 Elizabeth Carey, Vice President and Chief Financial Officer Cristina Sanz, Regional Director for Southern Oregon Val Rundquist, Endowment Partners Program Officer www.oregoncf.org
Agenda • Endowment Partners Program • Fund Administration • Endowment Defined • Investment Program • Deferred giving support www.oregoncf.org
The Oregon Community Foundation Mission To improve lives for all Oregonians through the power of philanthropy. www.oregoncf.org
The Oregon Community Foundation Many types of funds – Discretionary – Advised Donor • Community • Corporate • – Scholarship – Designated www.oregoncf.org
Designated Funds The grantees are designated at the time the fund is established. www.oregoncf.org
Two Types Donor Designated Fund Donor = Individual = Business = Organization Donor Grantee www.oregoncf.org
Two Types Agency Endowment Fund Donor = 501(c)(3) Public Charity Donor = Grantee www.oregoncf.org
Endowment Partner Funds Primary Benefits • Access to investment expertise • Create efficiencies • Access to planned giving advice and services • Advice on complex gifts www.oregoncf.org
Fund Administration Statements Fees Distributions Additions www.oregoncf.org
www.oregoncf.org
Fee Schedule Endowment Partner Funds Up to $1 million .50% Next $4 million .20% Above $5 million .10 % www.oregoncf.org
Endowment Long-term fund created to support an organization www.oregoncf.org
Endowment T wo Considerations: • Creation – Donor? – Board of directors? • Use – Income stream? – Rainy day fund? www.oregoncf.org
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 www.oregoncf.org
Endowment Board Designated “All boards distrust their successors.” Jerry Westersund Board Designated = Emergency Reserve www.oregoncf.org
Endowment OCF’s Definition • Fund maintained in perpetuity • Annual income stream • Goal = to manage the fund in a prudent manner as to not exhaust it in the long term. Model Considers • Investment • Expenditure www.oregoncf.org
OCF’s Investment Program www.oregoncf.org
Investment Objective To retain (at a minimum) the purchasing power of the funds AND When possible increase the purchasing power of the funds WHILE Producing a reasonable return for distribution to meet current community needs. www.oregoncf.org
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 www.oregoncf.org
Investment Program Overview www.oregoncf.org
Investment Committee William Berg, Chair, Board Member Portland Lyn Hennion, Medford Karen Harding, Portland Chris Magana, Portland Kirby Dyess, Board Chair Beaverton Duane McDougall, Lake Oswego Garth Nisbet, Portland Ronald Parker, Portland Eric Parsons, Out of State William Rutherford, Portland Lane Shetterly, Board Member Dallas Duncan Wyse, Board Member Portland www.oregoncf.org
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. www.oregoncf.org
Why Equities? www.oregoncf.org
Main Investment Pool Allocation March 31, 2017 www.oregoncf.org
Volatility Matters www.oregoncf.org
Volatility Matters www.oregoncf.org
T wenty-four-year Growth of an Endowment Partner Fund 1993-2016 www.oregoncf.org
Investment Return Summary May 31, 2017 www.oregoncf.org
Deferred Giving for Endowment Partners www.oregoncf.org
How Life Income Gifts Work www.oregoncf.org
Our Partnership Minimum Gift Type Designation of Residuum/Remainder Notes Gift Charitable $25,000 Residuum designated to nonprofit Minimum age of the annuitant is 60 • • Gift partner to add to an existing EP Fund 55 and older eligible to set up • Annuity Create a new EP Fund, if residuum deferred CGA • (CGA) meets current funding amount No fee • Charitable $100,000 For OCF to serve as trustee, 50% of Minimum age of beneficiary is 55 • • Remainder the charitable remainder value must Payout percentage to beneficiary • Trust be designated to nonprofit partner between 5% and 7% (CRT) to add to an existing EP Fund Fees for preparation of trust • Remaining 50% may be distributed document • directly to nonprofit partner Expenses related to carrying costs • New EP Fund may be created if the of unmarketable assets prior to • net present value of the remainder their sale interest for OCF is greater than or Administrator fee approximately • equal to the current fund minimum 80 bps annually ($25K) www.oregoncf.org
For questions regarding Deferred Giving for Endowment Partners please contact Cristina Sanz csanz@oregoncf.org 541.773.8987 www.oregoncf.org
Thank you for coming! The slide deck can be found at oregoncf.org/donors/endowment-partners www.oregoncf.org
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