ABOUT COMMUNITY FOUNDATIONS · Community foundations serve citizens in all 50 states and in many...

ABOUT COMMUNITY FOUNDATIONS

Helping donors do good work…forever.

What are Community Foundations? One of the fastest growing sectors of organized philanthropy in the United States today is that of community foundations. They build and strengthen communities by making it possible for a wide range of donors to create permanent charitable endowments to meet critical needs. Through philanthropy that is visionary, flexible, and inclusive, community foundations have become catalysts for improvement in their communities. Special Features of Community Foundations Community foundations serve citizens in all 50 states and in many countries worldwide. In the U.S. alone, community foundations, collectively, hold over $82 billion in assets and make local grants of approximately $6.5 billion annually to a wide variety of nonprofit activities including the arts, education, environmental projects, health, urban affairs, and social services.* Community foundations offer many services and benefits to donors. The foundations routinely work with families, individuals, estate planners, and attorneys to design gift plans that fit every economic situation so that donors can receive the greatest benefit from their charitable contributions and ensure that their philanthropic dollars are used to the fullest extent. Nearly every type of gift – such as real estate, stock, and life insurance – can be contributed to a community foundation. Gifts are made through bequests and by living donors who want to be actively involved in local philanthropy. *Foundation Center, 2014

Community Foundations Provide a Simple, Powerful and Highly Personal Approach to Giving A community foundation is a publicly-supported philanthropic institution governed by a board of private citizens chosen to represent the public interest and for their knowledge of the community. The foundation administers individual funds contributed or bequeathed to it by individuals, other agencies, corporations, and other sources. Community foundations uniquely serve three publics: donors, the nonprofit sector, and the community as a whole.

505.883.6240 albuquerquefoundation.org

ABOUT OUR COMMUNITY FOUNDATION

We can help you make a lasting difference.

The Albuquerque Community Foundation is a tax-exempt public charity created by and for people in the Greater Albuquerque Area. We enable those with philanthropic interests to easily and effectively support the issues they care about — immediately or through a planned gift. You can establish a charitable fund by contributing a variety of assets and can then recommend grants — in your name, if you choose — to nonprofit groups you want to support. Unique Features of the Foundation

Personalized Service. For individuals, families, and private foundations, we offer efficient stewardship of their philanthropic funds, professional grant-making and monitoring, and the most generous tax benefits provided by law. Local Expertise. Our professional staff has an in-depth understanding of the issues, opportunities, and resources that shape our community. We monitor all areas of community need, including arts & culture, at-risk children & youth, education, environmental & historic preservation, health, and human services. We can help you learn more about the organizations and programs that make a difference in areas you care about most. Community Leadership. We invest in the long term and bring people and organizations together, convening diverse voices to address local issues and opportunities. Our business is building community. Things We Know:

Needs will change, unfortunately they will never cease. Impact matters—Collaboration increases impact. We support the entire community.


The Foundation Administers a permanent community endowment comprised of many gifts, large and small, and uses the earnings from that endowment to make grants to other nonprofit organizations. Since our establishment in 1981, our total grant distributions are nearly $60 million, and we have funded over 10,000 grants to nonprofit organizations serving the Greater Albuquerque Area.

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Ten reasons to give through your community foundation

1. We are a local organization with deep roots in the community.

2. We have broad expertise on community issues and needs.

3. We provide highly personalized service tailored to your charitable and financial interests.

4. Our funds help people invest in the causes they care about most.

5. We accept a wide variety of assets, and can facilitate even the most complex forms of giving.

6. We partner with professional advisors to create highly effective approaches to charitable giving.

7. We offer maximum tax advantage for most gifts under state and federal law.

8. We multiply the impact of gift dollars by pooling them with other gifts and grants.

9. We build endowment funds that benefit the community forever and help create personal legacies.

10. We are a collaborative community leader, coordinating resources to create positive change.

History & Today: In 1981, the founders of the Albuquerque Community Foundation each

contributed $10,000 (a considerable sum at the time). The Foundation was thus begun with an extraordinary idea: Charitable giving should be the responsibility of many, not just a select few. Driven to improve the greater Albuquerque area, the Foundation has grown to become a leader in community philanthropy.

The Foundation strives to make sure every philanthropic investment returns the greatest emotional, civic, and financial benefit possible.

For more information and ideas on ways to integrate your financial and estate planning with charitable giving, ask your professional advisor and contact us.

ENDOWMENT An endowment is a forever fund that is invested and only the earnings are spent.

Give to the Future of Your Community. You’ve lived here. You’ve worked here. You are part of this community’s past and present. By creating an endowment fund with the Albuquerque Community Foundation, you can invest in this community’s future. How it Works:

• Choose to endow your gift to the Albuquerque Community Foundation—ask us about options for making gifts over time that add up to this minimum amount.

• The principal of your fund is never spent, and it can grow over time to generate an increasing stream of funding devoted to your interest areas and this community.

• Earnings are used to make grants that meet community needs. Your gift—and all future income from your gift—is a permanent source of community funding that makes good works possible, forever.

Your Legacy of Giving. When you choose to endow your gift, you have the opportunity to make a difference during your lifetime and, at the same time, provide for the community you care about for generations to come. As needs, opportunities and the nonprofit organizations that address them change over time, your wishes are preserved, and grants continue to make life better in the name of the fund you established. A Nonprofit’s Source of Stability. Leaders of a nonprofit organization may also look to the community foundation to hold their organization’s endowment because they know that having a constant source of funding helps them respond to emergency needs as well as plan for the future and sustain the good work they do. Together for Greater Advantage. Gifts endowed by the community foundation are pooled with others to achieve maximum investment efficiency and return. They grow and benefit community with guidance from experienced local leaders and expert investment managers.


A Lasting Contribution Known for her independent spirit and generosity, Ida May Cowen was admired by all who knew her. Born in 1896 and the eldest of seven children, Ida May sewed clothes and worked in a dry goods store. Her top priority in life was always to help the less fortunate. A gift from Ida May’s estate established an endowment fund with $55,000 in 1992. Since that time, the fund has awarded over $87,000 and the current fund balance is $74,000. That is the power of endowment.



1. We are a local organization with deep roots in the community.

2. We have broad expertise on community issues and needs.

3. We provide highly personalized service tailored to your charitable and financial interests.

4. Our funds help people invest in the causes they care about most.

5. We accept a wide variety of assets, and can facilitate even the most complex forms of giving.

6. We partner with professional advisors to create highly effective approaches to charitable giving.

7. We offer maximum tax advantage for most gifts under state and federal law.

8. We multiply the impact of gift dollars by pooling them with other gifts and grants.

9. We build endowment funds that benefit the community forever and help create personal legacies.

10. We are a collaborative community leader, coordinating resources to create positive change.

2019 BOARD OF TRUSTEES

Walter E. Stern, Chair President Modrall Sperling William P. Lang, Chair-Elect President Albuquerque Journal & Starline Printing Beverly Bendicksen, Treasurer President Sandia Financial Consulting, LLC Patrick V. Apodaca, Secretary SVP & General Counsel PNM Resources Carl M. Alongi REDW LLC Arellana Barela Cordero Southwest Capital Bank Kathleen D. Davis Kathleen D. Davis, Consulting, LLC Paul DiPaola U.S. Bank

Anna Doss Junior League of Albuquerque William E. Ebel CLU, ChFC, MSFS, AEP

Northwestern Mutual Glenn Fellows, FAIA SMPC Architects Debbie Harms NAI Maestas & Ward Rebecca Harrington Community Member Steve W. Keene Moss Adams LLP Pam Hurd-Knief Philanthropic Advisor Debbie Johnson CNM Albert T. (Ted) Jorgensen Titan, Inc. and Sound & Signal Systems of New Mexico

Kenneth C. Leach, Attorney Kenneth C. Leach & Assoc, P.C. Steve Maestas Maestas Development Group Marcus Mims, CPA CliftonLarsonAllen LLP Linda H. Parker Parker Center for Family Business Jerrald J. Roehl The Roehl Law Firm, P.C. Anne Sapon NM Health Connections George Stanfield Retired Banking Executive Julie Weaks Gutiérrez, Past-Chair Geolex, Inc. Jose Viramontes MediaDesk


PHILANTHROPY CENTRAL

Nonprofit Endowment Partnership

We’re pleased to partner with local nonprofit organizations that have an endowment fund at the Albuquerque Community Foundation. Benefits of the program include: Administrative Support The Foundation provides all administrative support related to organizations’ endowment funds, including providing fund performance reports.

Major and Planned Gift Expertise Foundation staff and consultants, who are experienced in major and planned giving, are available to the organization to help facilitate complex gifts to your endowment fund with the Foundation, including but not necessarily limited to: real estate, life insurance, and gifts in trust to the organization endowment fund. Visibility All funds administered by the Foundation are listed in the annual report and linked to the Foundation’s website. In addition, your organization may also be featured in the Foundation’s newsletter and other publications, thus increasing exposure to donors and the community at large. Prudent Investment Management The Foundation manages a growing list of organization endowment funds. The Foundation has a detailed investment policy to produce long-term growth of the funds administered, and the Foundation’s Investment Committee monitors fund performance. Economies of scale result in opportunities for more favorable returns and more reasonable management fees. Stability and Responsibility A fund with the Foundation shows donors that the endowing organization is serious about long-term financial security, and the fund’s permanence is ensured.

The Foundation considers effective management of organization endowments an important contribution to the strength of our community’s nonprofit institutions.



PHILANTHROPHY CENTRAL PARTNERS

A Child’s Garden, First Presbyterian Church (2) Adelante Development Center (2) Albuquerque Boy Choir Albuquerque Chapter of Military Officers Association of America Albuquerque Genealogical Society (2) Albuquerque Heading Home Albuquerque Health Care for the Homeless Albuquerque High School Alumni Association Albuquerque Hispano Chamber of Commerce Foundation Albuquerque Little Theatre Albuquerque Meals on Wheels Albuquerque Metropolitan Crime Stoppers, Inc. (3) Albuquerque Rose Society, Inc. Albuquerque Youth Symphony Program (2) All Faiths Amy Biehl High School Foundation Animal Humane Association of New Mexico (3) Animal Protection of New Mexico, Inc. ARCA, Inc. (2) Big Brothers, Big Sisters of Central New Mexico Boys and Girls Clubs of Central New Mexico Cancer Services of New Mexico Carrie Tingley Hospital Foundation Casa Angelica Casa Esperanza Cathedral Church of St. John Catholic Charities Challenge New Mexico Chamber Music Albuquerque Children's Cancer Fund of New Mexico Children's Grief Center of New Mexico Christina Kent Early Childhood Center Cibola County Education Foundation Congregation Albert Congregation B’nai Israel of Albuquerque Cottonwood Classical Preparatory School de Profundis Dominican Ecclesial Institute Dual Language Education New Mexico Explora Science Center & Children’s Museum Filipino American Foundation of New Mexico Friends of Corrales Library Friends of Music, Inc. Friends of the Rio Grande Nature Center Good Shepherd Center (4) Great Southwest Council, Boy Scouts of America Greater Albuquerque Habitat for Humanity Greater Albuquerque Housing Partnership Guadalupe County Hospital Junior League of Albuquerque Leadership New Mexico MANA de Albuquerque (2) Manzano Day School (9) Menaul School (3)

National Dance Institute (NDI) of New Mexico New Mexico Academy of Science New Mexico Art League New Mexico Ballet Company New Mexico BioPark Society (3) New Mexico Coalition for Literacy New Mexico Conference of Churches New Mexico Engineering Foundation New Mexico Geological Society, Inc. New Mexico Military Institute Foundation, Inc. New Mexico Museum of Natural History Foundation New Mexico Osteopathic Foundation New Mexico Parents of Multiples New Mexico PBS – KNME (3) New Mexico Philharmonic New Mexico School for Blind and Visually Impaired Foundation New Mexico Veterans' Memorial Foundation New Mexico Voices for Children (2) Opera Southwest Outpost Productions Parents Reaching Out PB&J Family Services, Inc. Pennies for the Homeless Planned Parenthood of the Rocky Mountains, Inc. (3) Presbyterian Ear Institute Roadrunner Food Bank Samaritan Counseling Center Santa Rosa Moise Memorial Library Senior Citizens’ Law Office Silver Horizons New Mexico Society for the Preservation of American Indian Culture Southwest Branch of International Dyslexia Association Special Olympics New Mexico St. George Greek Orthodox Church St. Mark's in the Valley Day School St. Martin's Hospitality Center (2) Sunset Mesa Teacher Endowment Fund The Arc of New Mexico Think New Mexico United Way of Central New Mexico (19) UNM Cancer Research & Treatment Center VSA arts of New Mexico WESST WildEarth Guardians YMCA Central New Mexico YWCA Middle Rio Grande

DESIGNATED BENEFICIARY FUNDS Helping to sustain and grow local organizations.

Designated Beneficiary Funds allow you to support the good work of a specific nonprofit organization. Because it’s given through the Albuquerque Community Foundation, your gift provides the organization you select not only funding, but also planned giving, investment management services, and the power of endowment. How it Works:

Make a gift to the Albuquerque Community Foundation—you can give cash, appreciated stocks, real estate or other assets.

Identify an organization that you wish to benefit. We establish a special fund in your name or in the name of the nonprofit

organization you choose. Your fund is pooled with the Foundation’s other endowment funds and

invested. Over time, earnings from your fund are granted to the nonprofit organization you choose. Your gift and all future earnings from your gift are a permanent source of income for your designated beneficiary.

We handle all the administrative details, including managing specific qualifications that you may establish for grant disbursements. If you prefer, grants may be made anonymously.

You receive tax benefits for the year your gift is made. A Designated Beneficiary fund begins with a $25,000 contribution and can be grown over 2 years. No distributions may be made until the fund has reached $25,000.


Giving a Gift that Lasts More than a Lifetime

Achille Alfredo Abbott arrived in New York in 1921. He was 9 years old and didn't speak a word of English. In 1930, “Al” joined the Army, and he retired as a lieutenant colonel 28 years later. Shortly after retirement, Al decided to take advantage of the G.I. Bill and complete his course work for a teaching career. After retiring for the second time, Al launched his third career, volunteerism. His hard work paid off in 1998 when he was inducted into the Senior Citizen’s Hall of Fame. During his years as a volunteer, Al became acquainted with the good work of ARCA and wanted to find a way to help the organization long after his volunteer years were over. At age 92, Al established the Alfred A. Abbott Charitable Endowment for ARCA. ARCA will receive a grant this year and every year in the name of Mr. Al Abbott.



We are a local organization with deep roots in the community. We have broad expertise on community issues and needs. We provide highly personalized service tailored to your charitable and financial interests. Our funds help people invest in the causes they care about most. We accept a wide variety of assets, and can facilitate even the most complex forms of giving. We partner with professional advisors to create highly effective approaches to charitable giving. We offer maximum tax advantage for most gifts under state and federal law. We multiply the impact of gift dollars by pooling them with other gifts and grants. We build endowment funds that benefit the community forever and help create personal legacies. We are a collaborative community leader, coordinating resources to create positive change.

The Albuquerque Community Foundation provides a simple, powerful and highly personal approach to giving. We offer a variety of giving tools to help you achieve your charitable goals. You can make a gift of cash, stocks, bonds, real estate or other assets to the community foundation. Most charitable gifts qualify for maximum tax advantage under federal law. For more information and ideas on ways to integrate your financial planning with charitable giving, ask your financial or estate advisor and contact us.

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CHARITABLE GIFTS

Achieve the greatest good with a creative giving solution designed around you.

Outright Gift. You may make a charitable gift of cash, stocks, bonds, real estate, or other assets and qualify for a tax advantage under federal law. You can give to an existing fund or establish a new fund to support your favorite interest now and in perpetuity. Bequest By Will. You may designate a gift or portion of your estate and, in some cases, be eligible for a substantial reduction in federal gift and estate taxes. Appreciated Stock. When you make a gift of appreciated stock, your gains are put to good use. Your gift of stock is reinvested in your community, and your gift qualifies for a tax deduction based on the stock’s full market value; you avoid capital gains taxes that would arise as a result of the stock’s sale. Life Insurance. Life insurance is a very cost-effective gift. Old policies can be assigned to the Albuquerque Community Foundation, or new policies may be purchased with the Foundation as owner and beneficiary. Retirement Accounts. You may donate money from retirement accounts and receive significant tax benefits. Different accounts have different advantages and opportunities for giving less money to the government and more money to the charity of your choice. Charitable Remainder Trust. You may place cash or property in a trust that pays annual income to you (or another named beneficiary) for life. After your death, the remainder of the trust transfers to the Foundation and is placed into the charitable fund you have selected. You receive income tax benefits for the year in which you establish your trust. Charitable Lead Trust. You may place cash or property into a trust that pays a fixed amount to the Foundation for the number of years you select. Once the period ends, the assets held by the trust are transferred to the beneficiaries you name. In some cases, you receive a substantial reduction in federal gift and estate taxes.


You Receive Personalized Service Each individual, family or organization we work with has distinct charitable interests—and unique financial circumstances. We help you make the most of both, so you receive the greatest return on your community investment. Contact us to learn more.


INVESTMENT MANAGEMENT

The Albuquerque Community Foundation is a public foundation that was established in 1981 to serve a broad range of charitable purposes in the Greater Albuquerque Area. Because we expect to operate in perpetuity, wise stewardship of the funds entrusted to the Foundation is essential to its mission. Therefore, the Board of Trustees of the Foundation has adopted policies and procedures to ensure its accountability to donors, beneficiaries, and the Greater Albuquerque Community. The Foundation structured its investment philosophy around the concept of complementary Investment Managers who are responsible for specific asset categories and management styles. In implementing its philosophy, the Foundation uses separate accounts, commingled funds, and mutual funds to accomplish its objectives. Management of the funds is a long-term responsibility. Therefore, long-term objectives — of at least 20 years’ duration — are the standard to be observed. Philosophy The central objective of our investment philosophy is to provide a stable and increasing stream of income for our funds’ charitable beneficiaries. Long-term, full diversification through all viable investment categories is desired in order to eliminate dependence on one or two categories, which is an approach that could adversely impact returns. Investment Committee The Investment Committee of the Foundation consists of 10 members, with at least three members appointed from the Board of Trustees. Other Investment Committee members (those not also on the Board) serve at the discretion of the President of the Board of Trustees, who appoints all Investment Committee members. Members serve three-year terms and may serve a maximum of three consecutive terms. The Investment Committee meets at least on a quarterly basis to review investment performance, asset allocation, and all other matters related to fiduciary oversight of investment assets. Investment Objective The objective of the total return investment management program is to produce growth and income sufficient to support both donor goals and fund objectives. Specifically, the long-term objective shall be a total return (the sum of earned interest and dividends and realized and unrealized gains or losses less all investment management costs) greater than or equal to the administration fees plus the product of the current principal amount multiplied by the sum of the rate of inflation (as calculated based on the Consumer Price Index) and 4.0%. Significant emphasis is placed upon the preservation and enhancement of the purchasing power of the amount of principal assets in the investment account. Distribution of Funds Our distribution policy recognizes the inherent conflict between serving current community needs while maximizing the growth of Foundation assets. The current annual distribution percentage is 4.0% of the average balance (during the fiscal year) of each fund.


INVESTMENT MANAGEMENT

Investment Consultant The Investment Committee has engaged an independent investment consulting firm to assist the Committee’s activities. The Consultant is expected to be proactive in recommending changes in investment strategy, asset allocation, and Investment Managers as situations warrant change.

As of November 1, 2016, the Foundation began utilizing the services of RVK. RVK is registered with the SEC under the Investment Advisors Act of 1940 as an Investment Advisor with no affiliation with any bank, brokerage firm, or money manager. Established in 1985, RVK is one of the few remaining full-service investment consultants that is 100% employee owned and solely focused on non-discretionary strategic investment consulting. RVK maintains a strict, no-conflict of interest policy that is well known throughout the investment community. Client fees are the only source of revenue for the firm. RVK has extensive experience serving endowment and foundation clients and currently serves several other endowments and foundations in New Mexico, in addition to the Albuquerque Community Foundation. RVK serves as a trusted advisor committed to exceptional and proactive client service with a long-term investment focus. RVK will work with the Foundation to design and deliver a portfolio tailored to the funds’ mission-critical objectives and tolerance for volatility and strives for the portfolio with the highest return for the level of acceptable risk. Asset Allocation The Investment Committee has evaluated the various investment asset classes available, considering the historical rates of return and relative levels of risk associated with each. The Investment Committee recognizes that, over the long-term, the allocation among various asset classes may be the single most important determinant for investment performance. An asset allocation policy was developed using appropriate best practice tools such as a mean/variance optimizer or other tools as appropriate. Asset Allocation Policy amended May 2018:

Target Range

Equity 48% 38% - 58% Fixed Income/Cash 11% 1% - 21% Real Estate 13% 8% - 18% Real Assets 5% 0% - 15% Multi-Strategy 10% 0% - 20% Private Equity 13% 3% - 23%


INVESTMENT PERFORMANCE

Annual Rates of Return

1994 0.0% 2003 1.2% 2012 9.8% 1995 14.4% 2004 16.4% 2013 10.2% 1996 16.2% 2005 8.2% 2014 6.1% 1997 17.0% 2006 9.4% 2015 -4.5% 1998 18.6% 2007 20.3% 2016 7.3% 1999 8.9% 2008 -23.7% 2017 14.8% 2000 10.6% 2009 13.6% (18 mos)* 2018 -2.7% 2001 0.0% 2010 10.2% 2002 -7.3% 2011 -1.7%

The Albuquerque Community Foundation changed its fiscal year end from June 30 to December 31 in 2008. From 1990 through 2007, the fiscal year period is July 1 of the previous calendar year through June 30. Beginning in 2008, the fiscal year period is January 1 through December 31. *This represents the return for the eighteen-month period of July 1, 2007 through December 31, 2008. The twelve (12) month return for July 1, 2007 through June 30, 2008 was .1%. (The average return for the Foundation’s peer group for the same period was –4.2%.) The six (6) month return for July 1, 2008 through December 31, 2008 was –23.8%. Average Returns (through December 31, 2018)

25.5 year average return 6.9% 15.5 year average return 6.3% 10.5 year average return 6.3% 5.0 year average return 6.3%


SPENDING POLICY

FUNDS’ DISTRIBUTION AMOUNTS:

ALLOCATION OF EARNINGS AND FEES

The Albuquerque Community Foundation recognizes the inherent conflict between serving current community needs while maximizing the growth of the Foundation assets. In seeking to maintain a balance between these diverse objectives, the Foundation has adopted the following rules, which constitute its Spending Policy, for determining funds’ distribution amounts:

Except as provided below, the recommended standard spending policy will be 4.0% of the time-weighted average balance of each fund for the previous twenty quarters. If a fund does not have historical fund balances for twelve quarters, then its distribution amount shall instead be calculated based on the total number of historical quarterly balances that the fund has, until such time as it has a twenty-quarter history; provided, however, that a fund generally must have a minimum of four historical quarters before a distribution is made. A fund’s time-weighted average balance will be computed by averaging the fund’s monthly ending balances, after allocation of investment gains or losses, and fees, during each quarter, and then averaging the quarter-ending balances. The Foundation will allow nonprofit organizations to receive a distribution up to 5.5% of the time-weighted average balance of a fund. Nonprofit organizations which want to take a distribution higher than the recommended standard spending policy must contact the Foundation to discuss the decision. The nonprofit organization Board Chair would be required to sign a form acknowledging the discussion of its options and must attach the nonprofit’s board minutes which show the board approved decision. Donor-advised and organization fund agreements allow additional distributions above the 4.0%, with certain conditions as detailed in the agreements.

If provided for in the endowment agreement or other gift instrument, a distribution may be made during the first twelve months following the establishment of a fund. The distribution percentage can be modified by a vote of two-thirds of the Trustees by May 31st of any year. Investment gains or losses from pooled investment accounts are allocated to each endowment fund on the last day of each month. The allocation is determined by dividing each fund’s daily average number of units for the month by the total of the daily average of all units in the pool and applying this fraction to the earning/losses in the investment accounts for the month. Any remaining distributions will be added to principal for purposes of determining distributions the following calendar year. The management fee will be charged quarterly based on the time-weighted average balance of each fund after allocation of investment gains or losses.


VARIANCE POWER

By United States Treasury Regulation, the governing body of a community foundation must have the power to modify any restriction or condition on the distribution of funds for any specified charitable purpose or to any specified organization if, in the sole judgment of the governing body, such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community or area served. The governing body must be able to modify the restriction without obtaining the approval of any participating trustee, custodian, or agent of the community foundation.

This requirement is commonly referred to as the “variance power” and has historically been the hallmark of community foundations: the ability of the governing body to exercise the function of cy pres without having to first obtain court approval. Under cy pres, a court will change the purpose of a charitable trust to the nearest similar purpose when the trustor’s purpose cannot be achieved because it is impossible, impracticable, or illegal. The standards which the regulations set forth for when a governing body should exercise the variance power are slightly broader than the standards that a court would use when exercising the doctrine of cy pres. An advantage of allowing a community foundation to make the change is that it, unlike a probate judge, is a charitable specialist and it is better able to identify the best charitable use of the funds for the community.

The easiest case for exercising the variance power is when a charity that was the beneficiary of a designated fund goes out of existence. Through its monitoring function, a community foundation can exercise the variance power if it determines that a charity has significantly changed the nature of its operations. It can also exercise the variance power if an activity is no longer a worthy charitable purpose (e.g., a trust to fund research to find a cure for polio or AIDS after such a cure is found).


WHY FEES?

The Albuquerque Community Foundation is a tax-exempt public charity primarily serving the Greater Albuquerque Area. The Foundation encourages philanthropists to easily and effectively support the issues they care about through a variety of charitable instruments — immediate and planned. We invest the endowment pool for a targeted average annual return of 5.2% plus CPI. The central objective of the Foundation’s investment philosophy is to provide a long-term total return that covers all fees, the Consumer Price Index and facilitates the distribution of a certain percentage of the time-weighted average balance of each fund each year (per the Foundation’s Spending Policy). Our mission is to build, invest and manage endowment funds to enhance the quality of our community through informed strategic grantmaking. We pledge to:

• Maintain an excellent investment program • Provide clear and accurate information about your fund • Respond to your inquiries and correspondence promptly • Understand the emerging needs of Albuquerque • Engage new generations of philanthropists • Offer fund advisors opportunities to partner with other donors • Recognize the community spirit of our donors

The Foundation offers excellent endowment management for a modest fee. For an endowment fund of up to $1,000,000, the Foundation’s annual management fee is 1.5% of the average daily balance of the fund. The fee is assessed quarterly. This fee is much lower than the cost of creating and administering a separate private or public foundation. Management fees for organization funds are calculated differently. Approximately 50% of the Foundation’s operating budget is supported by management fees. Each fund shares the cost of a competent staff providing the services of a multi-million dollar foundation to donors whose funds may start with as little as $10,000. Each endowment fund is also allocated its proportionate share of the investment consultant fee – which is currently approximately 0.155%. The management fee and investment consultant fee are shown on the fund statements mailed quarterly. All of the Foundation’s investments are managed by outside advisors. The investment returns of the funds reflect payment of those advisors’ fees. Currently, these fees are approximately .957%. These various fees enable the Foundation to provide the high-quality customer service, financial acumen, and investment performance philanthropic donors deserve.


GUIDELINES AND FEE SCHEDULE FOR ORGANIZATION ENDOWMENT FUNDS

An Organization Endowment Fund requires a minimum contribution of $25,000. The fund may be grown as an “grow a fund” allowing up to two years to reach the minimum contribution. All funds are combined with other funds of the Albuquerque Community Foundation for investment purposes and allocated their pro rata share of the investment income, net of the investment fee. The Foundation maintains the same investment strategy for all funds.

The Standard Spending Policy for a calendar year will be 4% of the time-weighted average balance of each fund for the previous twenty quarters. The Foundation will allow nonprofit organizations to receive a distribution up to 5.5% of the time-weighted average balance of a fund. Nonprofit organizations which want to take a distribution higher than the recommended standard spending policy must contact the Foundation to discuss the decision. The nonprofit organization Board Chair would be required to sign a form acknowledging the discussion of its options and must attach the nonprofit’s board minutes which show the board approved decision. The Foundation calculates each fund’s distribution of the available distribution in March.

Administrative Fees Each fund shares the cost of a professional staff, expert investment advice provided by the expertise of its Investment Committee, and an investment consulting firm. The services provided to multi-million dollar organizations are the same as they are for funds that start with $10,000. The Foundation monitors the investment, pays out grants from the income, files the tax return and handles all other administrative requirements. Administrative fees are charged quarterly.

Fee Schedule: $0-$25,000 (Grow a fund) 0.25% $25,000 - $100,000 0.85% $100,000 - $250,000 0.75% $250,000 - $500,000 0.65% $500,000 - $1,000,000 0.50% $1,000,000 - $5,000,000 0.40% Over $5,000,000 0.25% For example, the annual fee for a fund with an average balance of $400,000 would be computed as follows: the first $100,000 at 0.85%; the next $150,000 at 0.75%; and the remaining $150,000 at 0.65% for a total annual fee of $2,950.00.

Variance Power By United States Treasury Regulation, the Board of Trustees of the Foundation shall have the “variance power” to modify the designated use of the Fund if the purposes for which it was created ever become obsolete, incapable of fulfillment, or inconsistent with the charitable needs of the Albuquerque community or the charitable purposes of the Foundation. As a result, all component funds are considered to be part of a single public charity, the Albuquerque Community Foundation.

The Foundation is the legal owner of all assets contributed to any of its component funds. However, organization assets are presented as a liability on the Foundation financial statements and should be presented in “Other Assets” - for example, as a beneficial interest in assets held by the Foundation on the financial statements of the organization. This is only for financial statement presentation purposes, and the legal ownership of the assets still remains with the Foundation.


A $25,000 Endowment over 25 Years

AssumptionsFund Balance

Estimated Annual 4% Distribution

Fund Balance as of 12/31/19 $25,000 5 year

projection $53,715.97 $1,909.49

Avg. Investment Return 6.90%10 year

projection $85,498.50 $3,155.56

Distribution Rate 4.00%25 year

projection $202,698.85 $7,749.10

Average Contributions per year $5,000

Estimated fee 0.85%

A $25,000 Endowment over 25 Years

$-

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

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Investment Return Endowment Fund Balance Distribution

Year 5 Fund Balance: $53,715Investment Return: $3,293Distribution: $1,909



Year 20Fund Balance: $159,608Investment Return: $10,453Distribution: $6,060

Year 25Fund Balance: $202,698Investment Return: $13,367Distribution: $7,749

ABOUT COMMUNITY FOUNDATIONS · Community foundations serve citizens in all 50 states and in many...

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Transcript of ABOUT COMMUNITY FOUNDATIONS · Community foundations serve citizens in all 50 states and in many...