Investment Philosophy

The Community Foundation of North Central Massachusetts has an important responsibility to its donors and the community to ensure that every gift is invested with diligence and a long-term view. The Board has developed a comprehensive investment strategy to guide its decision making.

The following is a brief overview of the Foundation’s Investment Policy. For the complete policy, please contact Linda Mack, lmack@cfncm.org at 978-345-8383.

The Investment & Finance Committee (Committee) is empowered by the Foundation Board of Trustees (Board) to direct and monitor the investment management of the Community Foundation of North Central Massachusetts (Foundation) funds. The Foundation’s Investment Policy Statement (IPS), issued by the Committee, is designed to cover the assets donated or held for charitable benefits.

It is the intention of the Committee to offer three separate investment objectives to meet the differing needs and missions of various charities. The IPS also prescribes cash management policies for the Foundation’s cash reserves held for near-term needs and contingencies.

The Charter for the Investment & Finance Committee outlines the following responsibilities:

• The Committee shall submit to the Board, for approval, a statement of investment policy outlining the objectives and guidelines for the investment assets
• The Committee, from time to time, shall review the investment policy statement and recommend appropriate changes to the Board
• The Committee will include in its policy statement a list of prohibited assets that the Committee believes are not appropriate for the Foundation
• The Committee will recommend to the Board a spending policy for the Endowment Funds, taking into account sustainable payout rates, and including a withdrawal rate from the endowment on a year-to-year basis
• The Committee may choose to hire an investment manager (Manager) and shall review the manager at least once a year.

In general, the purpose of the IPS is to outline a philosophy and attitude that will guide the investment management of the Foundation’s funds toward the desired results. It is intended to be sufficiently specific to be meaningful, yet flexible enough to be practical. The Committee has considered the financial implications of a wide range of policies, and this statement describes the prudent investment process that the Committee deems appropriate.

To assure continued relevance of the guidelines, objectives, financial status, and capital markets expectations as established in the IPS, the Committee will periodically review investment policy.

Performance Returns

The Foundation has a very dedicated Investment and Finance Committee, whose job it is to invest donors' money efficiently and effectively. Considerable time was devoted to creating an Investment Policy, which guides the trustees and our money management firm.

It is our goal to maximize the Foundation's investment returns without taking undue risk. That is why we have a diversified portfolio, representing 14 sectors. It provides stability and the opportunity to maximize returns, which provides the Foundation with more resources it can invest in the community.

Performance Returns for the period ending:

November 2018

^{(Click on the icon for a downloadable PDF file with long, medium and short-term performance returns as well as performance returns for agency funds)}

Past performance does not guarantee future results

Spending Policy

For the Community Foundation Endowment Fund and any other board-controlled permanent funds, each year the Foundation shall distribute 4.5% of the fund’s average market value over the prior 20 quarters (except for additional contributions to the Endowment Fund less than five years old).

For additions to the Endowment Fund less than 5 years old and that total $100,000 in new contributions, the Foundation shall distribute 4.5% of the additions’ average quarterly market values as of the end of March each year.

Permanent endowment fund beneficiaries may elect to receive their distributions on either an annual or quarterly basis once the fund has reached the first year anniversary. The selection request must be made in writing to the Foundation upon notification of the distribution cycle. The beneficiary may change this option (in writing) on the annual anniversary of the fund.

This spending policy may be revised by the Finance and Executive committees and submitted to the Board for approval from time to time.

Administrative Fees

Administrative tasks associated with the management of funds include investigation of grants, receipts and acknowledgement of contributions, payment of grants, oversight of investment management, and compliance with federal and state reporting requirements.

To support these activities, the Foundation charges a tiered annual fee ranging from 1% to 0.10% of the fund’s market value. The fee is calculated at 1/12th of the fund’s market value at the end of each month.

The tiered fees are broken down as follows:
First $2,000,000 >> 1.0%
Next $3,000,000 >> .25%
Amounts above $5,000,000 >> .10%

Administrative Fees Subject to Change