Endowment Building in Today's Market Conditions

The Community Foundation is perpetual. This is what we communicate to our donors and grantees. However in recent months, the volatility in the stock market has been a cause for concern for many investors. It is tempting to allow these short-term fluctuations to influence our thinking, but it is important to remember that investment returns are cyclical. We are currently in an accumulation phase instead of a growth phase, which produces opportunity for the future.

The Finance Committee reviews our Investment Policy Statement annually. The investment policy is designed to help our endowment funds weather the storm. Within our policy are the following strategies for investment:

following a consistent asset allocation;
rebalancing the allocation regularly; and
maintaining a well-diversified portfolio.

Our investment advisors do not try to "time the market" or to change the investment strategy based upon a short-term outlook.

The following are key points to our distribution (pay-out) policy:

calculation of grant/scholarship amounts are based upon each fund's market balance at the end of each quarter, up to 12 trailing quarters; which
results in smaller distributions for new funds in the beginning to allow for earnings to accumulate and build a cushion for grantmaking during times of poor market performance in the future.

It has been eight years since the market decrease in 2000-2002. However, in looking over the historical performance of some of the Community Foundation's older funds (established in 1995-1997), nearly all of these funds have grown (even without additional gifts) by approximately 20% of the original gift value and have granted approximately 30% to 65% of that value depending upon the year the fund was established.

Examples of actual funds are listed below:

Grace United Methodist Church Fund
Funded in 1995 with $50,000
1999-2007 Additional Gifts: $5,335
Total Grants Paid: $34,481
Current Fund Balance: $72,298

Peru First Baptist Scholarship Fund
Funded in 1996 with $8,246
1999-2005 Additional Gifts: $6,500
Total Scholarships Paid: $6,434
Current Fund Balance: $17,705

Ann R. Nichols Community Fund
Funded in 1997-1999 with $17,500
2002-2007 Additional Gifts: $4,050
Total Community Grants Paid: $6,645
Current Fund Balance: $25,985

As time goes by, these funds will continue to grow and fund the needs in our communities. The power of endowment and the importance of a long-range view become more and more apparent and important as the needs of our communities grow.

Northern Indiana Community Foundation, Inc.
"Where Giving Grows"