The Eastern West Virginia Community Foundation strives to preserve the real (after inflation) value of its current and future endowment assets. The Foundation has an active Finance and Investment Committee that meets quarterly and reviews the Community Foundation’s Investment Policy Statement annually. Each of the six Investment Advisors we currently work with provide quarterly statements and biannual updates to the committee.
The Community Foundation also seeks to provide the maximum flow of funds for grant making, by keeping operating expenses and fees (including investment management fees) to a minimum. Success depends upon receiving the highest possible total rate of return on its investments consistent with reasonable prudence with respect to volatility and safety of principal. The Community Foundation’s assets are viewed with disciplined, longer-term investment objectives and strategies that will accommodate relevant, reasonable, and probable events. In order to guide its investments and accounting practices, the Community Foundation has established Investment and Spending Policies that are reviewed periodically in consultation with its investment advisors.
The Community Foundation’s investment advisors may range from banking institutions to investment firms having a local presence.
Special Thanks to our Investment Advisors and the local and regional financial institutions where they work for providing outstanding services at a reduced fee in support of the mission of the Community Foundation:
Leslie Crabill of BCT—Bank of Charles Town
Keith Unger and James “Rusty” Hudnall of City National Bank
Tom Peterson and Chenoa Everett of CNB Bank, Inc.
Matt Kradel and Scott Rush of First United Bank & Trust
Ned Worthington and Derek Elphick of United Wealth Management
Susan Cassidy and Bert McEldowney of BB&T Retirement and Institutional Services
INVESTMENT POLICIES
Objectives
The nominal rate of return objective is an average long-term objective of 7%, net of investment fees. The Committee is aware that there may be short-term deviations from these objectives, and shall evaluate achievement with these and other performance expectations.
Asset Allocation
The Community Foundation seeks a diverse investment structure to better control diverse investment style of its advisors and volatility of the market.
The Committee expects an asset mix with a range of 55% – 70% Equity, 0 – 10% Alternative, and 30% to 45% Fixed. Detailed class, style, ranges of the Community Foundation asset categories are specified on Attachment A of the Investment Policy Statement.
Financial and inflation rates are cyclical. This policy is meant to minimize the impact of market volatility through diversified asset, class, and style selection. Specifics set forth in Attachment A shall be regularly reviewed, at least annually, and revised as deemed necessary.
Rebalancing
At least once each quarter, the Investment Committee reviews the actual asset mix against the model and determines whether rebalancing is necessary, using these guidelines:
- Changes in asset, class, and style will be made any time the quarterly weighting is outside their established weight range.
- In the case of major market movements resulting in variations described above, rebalancing recommendations may be made to the Community Foundation’s Investment Advisors by the Investment Committee Chair and another member of the Investment Committee prior to the next quarterly meeting of the Investment Committee.
Diversification
No single investment advisor’s portfolio should invest more than 5% of the funds in bonds (using a market basis) in any one corporate debt security other than a U.S. government or U.S. government agency obligation. No single investment advisor’s portfolio should invest more than 10% of the equities (on a market basis) in any one equity issue.
Investment Management
Investment advisors will be maintained, removed and appointed based on demonstrated quality of service.
Investment advisors are given discretion to manage funds entrusted in accordance with the style for which they are employed provided they comply with the restrictions and limitations as may be determined from time to time.
Evaluation of Investment Advisors
At reasonable times and at the discretion of the Investment Committee, meetings shall be held with investment advisors to discuss performance results, economic outlook, organizational changes and other pertinent matters.
- The investment advisors will be expected to consistently achieve a total rate of return that is equal to or above the index benchmarks.
- The investment advisors will maintain a portfolio for the Community Foundation characterized by their respective traditional management styles but in keeping with the model and range allocation detailed in the Investment Policy Statement. If a change in style is contemplated, the investment advisors are required to make advance written notification to the Community Foundation’s Investment Committee.
Investment Advisors’ Communication and Reporting
Copies of investment quarterly reports are received by the Eastern West Virginia Community Foundation within 30 days of the end of the quarter. The investment advisor is responsible for free and open communication with the Investment Committee in all significant matters pertaining to investment policies and management of Community Foundation assets including but not limited to: (a) major changes in the investment policies and advisor’s investment outlook, investment strategy, and portfolio structure; (b) any significant changes in the ownership, organizational structure, financial condition, or senior personnel staffing of the investment advisor’s organization; and, (c) quarterly transactions, evaluation, and performance.
Removal of an Investment Advisor
The Community Foundation reserves the right and authority to replace any participating investment advisor or agent for breach of fiduciary duty under West Virginia law, and to replace any participating investment advisor or agent for failure to produce a reasonable return of net income over a reasonable period of time, as determined by the Board. Such recommendations are expected to be put forth by the Investment Committee.
Addition of New Investment Advisors
It is the Community Foundation’s current judgment that diversification of investment assets as well as diversification of investment advisors is highly desirable. In some circumstances, a Community Foundation donor may recommend an advisor with no current fiduciary relationship with the Community Foundation. Conversely, an investment advisor may introduce a client to the broad and flexible mission of the Community Foundation.
The following criteria shall be used to consider the addition of a new investment advisor:
- A new investment advisor has a local presence and is known to the community at-large to offer professional, ethical, and well-regarded investment services;
- A new investment advisor can and will meet all reporting and communications criteria deemed necessary by the Investment Committee;
- A new investment advisor will apply investment fees in relationship to those already being charged to the Community Foundation by existing investment advisors;
- A new investment advisor has a minimum amount of $250,000 of the Community Foundation’s assets under management. Such minimum amount may include the amounts contributed to new Funds by a donor, and must include amounts from existing Funds established by one or more other donors transferred to the new investment advisor by action of the Board of the Community Foundation. The purposes of this criteria are (a) to require that all investment advisors manage amounts contributed by more than one donor, and (b) to allow for at least a minimal level of diversification under the Community Foundations asset allocation model to apply to amounts under management with the new investment advisor;
- The Community Foundation’s internal accounting and financial systems can support such expansion;
- And, the Community Foundation’s Investment Committee formally votes, either electronically or during a face-to-face meeting, to approve and accept the newly proposed investment advisor.