Investment Approach, Fees, and Performance
Our investment approach is determined by our total assets and the cash flow requirements of our various Funds. Three investment pools are currently managed by our Investment and Finance Committee. Each pool has a different target allocation, intended to meet the unique cash flow needs of the Funds within the pool:
Long Term Pool – All endowed funds. Equities 65% Fixed Income 27% Real Estate 5% Cash Equivalents 3%
Mid Term Pool – Non-Endowed Funds, intended to be disbursed over several years. Equities 25% Fixed Income 65% Real Estate 5% Cash Equivalents 5%
Short Term Pool – Non-Endowed Funds, intended to be disbursed within one year, or if distribution plans are unknown. Cash Equivalents 100%
The Board has directed our Investment and Finance Committee to limit our investments to no-load mutual funds, cash, and other cash equivalents. At our current asset levels, this approach is seen as the most cost effective and prudent. The Investment and Finance Committee has selected index-type mutual funds that meet the investment objective of each pool.
Fund Administrative Service Fees
Annual fees cover normal administrative costs to manage investment and grantmaking and may also provide funds to support our community leadership activities. Additional fees may be assessed for required outside consulting, legal work, or the processing of large numbers of gifts or disbursements. Expense ratios associated with our investments are less than 0.3% at present. We do not provide financial benefits of any sort to third-party participants in the gift planning process. Currently, we do not charge a separate investment management fee.
Endowed Funds fees
Endowed funds will be charged an administrative service fee on the following progressive scale:
1.50% on the first $499,999.99 of fund assets
1.00% on fund amounts between $500,000 to $999,999.99
0.75% on fund amounts between $1 million and $4,999,999.99
0.50% on fund amounts above $5 million
The fee schedule will be applied to the total dollar amount in multiple endowed funds contributed by a single donor.
For example, a single donor maintains three endowed funds as follows:
Endowed Fund #1: $ 400,000.00
Endowed Fund #2: $ 300,000.00
Endowed Fund #3 $1,700,000.00
Total Single Donor Endowed Funds $2,400,000.00
Fee Calculation: (1.5% X $499,999.99) + (1.0% X $499,999.99) + (0.75% X $1,400,000.00) = $23,000.00 (Or an average fee of 0.9583%)
Non-Endowed Funds fees
Non-endowed funds will be charged an administrative service fee on the following progressive scale:
2.00% on the first $499,999.99 of fund assets
1.50% on fund amounts between $500,000 to $999,999.99
1.25% on fund amounts between $1 million and $4,999,999.99
1.00% on fund amounts above $5 million
For example, a single donor maintains three non-endowed funds as follows:
Non-Endowed Fund #1: $ 400,000.00
Non-Endowed Fund #2: $ 300,000.00
Non-Endowed Fund #3 $1,700,000.00
Total Single Donor Non-Endowed Funds $2,400,000.00
Fee Calculation: (2% X $499,999.99) + (1.5% X $499,999.99) + (1.25% X $1,400,000.00) = $35,000.00 (Or an average fee of 1.4583%)
Assessment of Fee
The full annual fee will be levied on the balance in the fund on the first day of the new fiscal year. In addition, the full annual fee will be levied on any new gifts received during each quarter at the end of the quarter.
Whatcom Community Foundation Investment Returns : Investment Performance 09-30-2019.