Investment Strategies and Performance
Growth of Assets
The Community Foundation Alliance’s total assets have grown from $400,000 at the end of our first year (1991) to $49.2 million at the end of our most recent fiscal year (June 30, 2009).
Stewardship of AssetsThe Alliance carefully manages long-term charitable funds primarily for the benefit of the communities of Daviess, Gibson, Knox, Perry, Pike, Posey, Spencer, Vanderburgh, and Warrick counties in Indiana. Stewardship of the funds entrusted to us is a primary responsibility of the board of directors. The Alliance’s investment committee, appointed by and reporting to the board, has immediate oversight of all aspects of the Alliance’s financial management, including investment policy, guidance, and review. The committee is comprised of board members with specific experience and expertise in financial and investment management. In addition, financial statements and accounting policies and controls are audited annually by BKD LLP, an independent auditing firm. Download a copy of our 2011 Audit Report (Adobe Reader required) or contact us to request a copy by mail.
Approach to Investing
The Alliance espouses a long-term approach to investing. A consistent and balanced approach to investing assets is fundamental to the Alliance’s overall investment goal, which is to build and maintain community capital for future use while at the same time supporting current community needs. Our goal is to earn a reasonable return on its investments while maintaining a diversified, high-quality portfolio without undue risk of significant capital depreciation.
Over the 2009 fiscal year, the credit crisis and slowing U.S. economic growth continued to dominate the financial markets. Overall for fiscal year 2009, the Alliance experienced a negative 19.3% return on investments. The volatility in the financial market has been a cause for concern for many investors. It's tempting to allow these short-term fluctuations to influence our thinking, but it's important to remember that investing to sustain endowment funds requires an acceptance of market volatility. Without such risk, we cannot even hope to achieve the return needed to sustain endowment funds over the long term.
Allocation of Assets under Investment
The Board believes that allocating investment of the endowment pool among a broad range of classes will achieve enhanced returns, lessen the impact of market volatility, minimize risk, and maintain a stable pattern of investment success. This strategy is based on a portfolio strategically allocated and carefully balanced as follows: 50 percent in U.S., international, and private equities (growth); 12 percent in fixed income and 20 percent in Hedge funds (risk reduction); and 15 percent in real assets and 3 percent in TIPS (inflation protection).
The Alliance employs professional investment management firms, which the investment committee selects and reviews regularly, with the assistance of a professional and independent consultant. Contact our finance officer to learn more about the individual investment vehicles employed by the Alliance.