ENDOWED FUNDS
The Foothill-De Anza Foundation Endowment is invested within a consolidated pool, but each endowed fund is created and accounted for separately and used in accordance with the donor’s wishes. A small portion of the endowment is invested separately—typically because of donor restrictions. All endowments are managed and directed per the Foundation Investment Policy, Foundation Endowment Policy, and the Investment Payout Procedures.
The following payout procedures are set in place in order to maximize the likelihood of the endowment maintaining intergenerational equity, and to deliver a consistent as well as growing stream of income to the operating budget.
ENDOWMENT PAYOUT
Current Endowment Policy sets the payout for endowed funds at a minimum of 4% of the principal based on the applicable market value of the investment pool. The applicable market value is defined as the average of the consolidated investment pool’s market values for the 12 trailing quarters ending on June 30 of the fiscal year just closed.
The payout will be valued when closing reports are received from fund management companies. Distribution is typically planned for August of the new fiscal year.
A newly funded endowment will receive a payout in the fiscal year following its creation, prorated on the number of months the fund is invested within the pool for the that current fiscal year. Up to 2% of the endowment portfolio’s fair market value will be assessed each year to offset the associated administrative expenses incurred by the Foundation.
OPERATING FUNDS
The Foothill-De Anza Foundation invests some expendable, gift funds in a consolidated Operating Fund pool, but each of these funds is created and accounted for separately and used in accordance with the donor’s wishes. The Operating Fund pool is managed using the same investment strategies for the endowed funds except for fixed income vehicles with reduced liquidity. Investment allocations for these funds will be reviewed annually and adjusted periodically by the Finance and Investment Committee.
The Foundation takes its investment responsibilities for these operating funds seriously, but is not under donor or Board mandate to return income to the funds to maintain intergenerational equity. The Operating Fund pool will be valued by the close of the fiscal year based on current-year income to the Fund, and payout will occur in the following fiscal year, typically in August. There will be no minimum payout set for funds invested within the Operating Fund pool, and a reasonable percentage of the Fund’s realized and unrealized gains and income will be used to support the Foundation.
Adopted October 26, 2005
Revised by the Finance Committee on July 29, 2008
Adopted by Board on August 27, 2008
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