The Investment Guidelines for St. Mark’s Episcopal Church as shown below was officially approved by the Vestry at their April 14, 2011 meeting. Since then no other known changes have been made to this policy.
- D) Investment Policy (Heath): Heath (MacAlpine) distributed the latest revision of the document entitled “Investment Guidelines for St. Mark’s Episcopal Church.” He explained that this revision encompassed the latest changes proposed by committee members. Carol (Nancarrow) then added she would like to see two additional changes made to the document. The first revision was that the wording “All long term investments…” be amended to “All designated long term investments…” such that funds like the Stott Fund, which were meant to have its dividends distributed to those in need, would be excluded from being pooled with the other legitimate long term investments. The second revision was concerning memorial funds. Carol noted that St. Mark’s has received memorial funds from various parishioners in the past and has not made visible records of such funds. She would like to see a policy where for any appropriate memorial fund that a leaf be added to the Giving Tree located in the rear of the Sanctuary to recognize the memorial. The funds should then be properly designated per the instructions given by the donor. If there are no concrete instructions, then the Vestry should decide how those funds are to be allocated. Heath responded that he will include the exceptions to the long term fund designation, specifically taking exception to the Stott Fund. He also noted he will add a note about appropriate memorials and how to specifically deal with those funds. A motion was made by Carol and seconded by Jim (Rudd) to accept the proposed Investment Guidelines for St. Mark’s Episcopal Church as amended. The motion passed by voice vote unopposed.
Investment Guidelines for St. Mark’s Episcopal Church
- Investment Objectives
St. Mark’s Episcopal Church (the Church) is committed to a long-term, balanced approach to preserve and enhance the real purchasing power of its investments (the Investment Fund) so as to provide both a stable stream of current income for operating needs as well as funding for capital projects, memorials, and other initiatives of the Church.
The Church’s objective for the Investment Fund is to attain an average real total return (i.e., adjusted for inflation and net of fees) of at least 7 ½ % per year, measured over rolling 3-, 5-, and 10-year periods. The Church invests for total return: all interest, dividends and gains are reinvested and are included in the calculation of the portfolio’s total return.
- Pooling
All long-term investments of the Church, whether restricted or unrestricted, will be pooled so that every fund within the pool shares equally in the risks and returns of the investments and for efficiency and consistency in management. Named and restricted funds will be tracked within the pool and reported on quarterly.
The investment pool is only for those assets of the Church that are available to be invested long-term. No short-term or mid-term reserve funds will be held in the pool.
- Portfolio Composition and Asset Allocation
The Investment Fund’s assets will be diversified, where practical, by both the asset class (e.g., stocks, bonds, etc.) and within each asset class (e.g., within equities by sector, size, etc.).
Assets will be broadly divided into two parts, the Equity allocation and the Fixed income allocation. The target percentage of equities to fixed income instruments is 65% equities and 35% fixed income.
The portfolio will be rebalanced to the target allocation when the actual ratio is more than 10% from the target.
- Accessing the Investment Fund
- Operating Expenses
The Church will endeavor to preserve the Investment Fund by maintaining a balanced annual operating budget without accessing the Investment Fund. In the event that the approved annual operating budget includes a projected deficit, however, the Vestry may request that an amount equal to no more than 75% of the projected deficit or 25% of the Investment Fund, whichever is less, be withdrawn from the Investment Fund and placed in a Special Deficit Coverage Fund (the Deficit Fund). The Deficit Fund will be invested in an appropriate fixed low risk instrument in order to preserve immediate access. Any amounts in the Deficit Fund remaining unspent will be returned to the Investment Fund immediately following the end of the Church’s fiscal year.
- Capital Expenses
The Church may also require funding for planned or emergency capital projects. The Church will endeavor to preserve the Investment Fund by mounting a special capital campaign prior to accessing the Investment Fund. In the event that the special capital campaign fails to raise sufficient funding, however, the Vestry may request that an amount equal to up to 75% of total annual capital expenditures or 25% of the Investment Fund, whichever is less, be withdrawn from the Investment Fund placed in a Special Capital Coverage Fund (the Capital Coverage Fund). The Capital Coverage Fund will be invested in an appropriate fixed low risk instrument in order to preserve immediate access. Any amounts in the Capital Coverage Fund remaining unspent one year following the date of the Vestry’s request will be returned to the Investment Fund.
- Investment Management Structure
The Investment Fund will be managed by the Investment Committee. The Investment Committee will be comprised of five church members, including the Treasurer, and will be appointed for a term of one year by the Vestry. The Treasurer will chair the Investment Committee.
The Investment Committee will endeavor to invest only in vehicles that
- are easily understood by the members of the committee.
- can be easily liquidated.
- possess a low fee structure for maintenance and transactions.
- demonstrate a reasonable balance between risk and reward.
The Investment Committee is not permitted to sell or buy any investment vehicles without the approval of the Vestry. In order to obtain that approval, a majority of the Investment Committee must agree to a specific recommendation to the Vestry. That recommendation will be presented to the Vestry for its consideration at the next Vestry meeting.
- Monitoring of Objectives and Results
The Treasurer will prepare a quarterly report, subject to review and approval by the Investment Committee, for presentation to the Vestry. The quarterly report will detail the current status of the Investment Fund portfolio as of the end of the preceding quarter. The quarterly report will also include measurements of the Investment Fund’s total return against the goal for the Investment Fund. The quarterly reports are to be presented to the Vestry at its February, May, August, and November meetings.
The Investment Committee will meet and monitor the Investment Fund in April and October of each year to assess it for consistency in investment philosophy, return relative to objectives, investment risk as measured by asset characteristics, exposure to economic conditions and market volatility. For the purposes of this review the Investment Committee will measure the performance of the Church’s portfolio against appropriate benchmarks. The Investment Committee will report its findings to the Vestry at the May and November meetings.
- Donor Gifts
The Church will encourage gifts to the Investment Fund. Unless otherwise required as a condition of a gift, those gifts will be invested in accordance with this policy. Securities or other property received as gifts will normally be sold upon receipt and the proceeds invested in accordance with this policy. Gifts given as memorials in recognition of church members or others will be promptly recognized by the Vestry and memorialized with a plaque or other appropriate honor.
- Additions to Principal
The Church desires to continually increase the principal available to the Investment Fund. In those years in which its operating budget is in balance and does not require accessing the Investment Fund, it will endeavor to contribute additional principal to the Investment Fund.
- Periodic Review
The Investment Committee will review these guidelines and the allocation policy annually at its April meeting and make recommendations to the Vestry for any changes that may be appropriate.
