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To ensure its accountability to donors, beneficiaries and the community, the Community Foundation Investment Committee provides oversight of the management of the Foundation’s assets and adheres to the following practices:
I - GENERAL INVESTMENT OBJECTIVES The financial and investment objective of the long-term investment funds is to provide ongoing financial support to the programs and operations of the Foundation while preserving the inflation-adjusted purchasing power of the invested assets.
II - ESTABLISHMENT OF INVESTMENT MANAGERS Based on evaluation by and recommendation of the Investment Committee and the approval of the Board of Trustees, suitable financial institutions or firms evidencing a proven investment performance record will be retained to manage the investment portfolio, in revocable agreements. The selected Investment Managers will operate in accordance with policies established by the Investment Committee and the Board of Trustees. In order to minimize risk, the number of managers to be utilized, and the funds assigned to each, will be reviewed and determined periodically by the Investment Committee.
III - INVESTMENT MANAGEMENT The Investment Managers will have the responsibility to invest the funds in their care according to the Foundation’s Preferred Partners Agreement and Investment Management Policy. All such investment assets will be accounted for and reported as separate funds by the Investment Managers.
IV - INVESTMENT MANAGEMENT PERFORMANCE AND EVALUATION Preferred Partners will be required to provide a quarterly or annual investment report for the Investment Committee, the results and summary of which will be reported to the Executive Board and the Board of Trustees. Preferred Partners will also make formal review presentations as requested by the Investment Committee. Further, the performance of the Investment Managers will be evaluated by the Investment Committee on a quarterly basis, which will include an in-depth comparative evaluation on an annual basis. Results and recommendations are to be reported to the Board. Performance will be measured against comparable Investment Managers and results expected to rank in the top half of equity and fixed funds. Additionally, equity funds results will be compared with the S & P 500 Index, the Dow Jones Index, and other appropriate measurements. The fixed income results will be compared with a generally accepted bond index of comparable quality and maturity.
V - INVESTMENT RESTRICTIONS The equity portion of the total funds invested shall not exceed 50% of total assets, at market value, with the balance in fixed income investments or short-term invested reserves. The equity portion of each Investment Account shall be invested in a diversified list of publicly traded common stocks or securities convertible to common stocks. No single issue may represent more than 5% of the market value of the equity portfolio. Equity managers shall not engage in margin purchases or borrowing, short selling, options for futures trading, or other specialized investment activity. The aggregate holding of the equity manager must be invested in securities, which do not restrict the Manager's ability to readily liquidate the position. Fixed income funds will be invested only in fixed income securities rated investment grade or better by Standard and Poor's or Moody's rating services, Federally-insured obligations of banks or savings and loan institutions, US Treasury securities or securities issued by US Government agencies that carry the guarantee of the US Government. Other than securities issued by the US Government, no single issue may represent more than 5% of the market value of the fixed income portfolio.
VI - UNALLOCATED CASH The Investment Committee will generally attempt to see that the Fund's assets include a cash reserve sufficient to make distributions with a reasonable future period. Current cash needs are: 5% of assets (based on 3-year rolling average). Managers are requested to have 5% available at each quarter end. Therefore, any investment manager performing under this policy is not expected to accumulate a significant cash position, without prior approval of the Investment Committee. In general, "significant" means more than 20% of the value of assets under management.
VII - SPENDING POLICY Current spending target is 4% of assets based on a rolling 3-year quarterly average. The percentage will be reevaluated annually, based on inflation and gifting needs.