The Episcopal Church of the Good Shepherd receives gifts or bequests from individuals, families, corporations, and foundations for purposes of providing long-term financial support to the Church programs as selected by the Vestry.
The investment objective of the Endowment Fund is to protect the real (after inflation) purchasing power of the assets after funding charitable activities and related expenses.
Members of the Church of the Good Shepherd, either as individuals or as groups, may apply to the Vestry for financial assistance in extending the kingdom of God through programs of Christian service, worship, education, evangelism, or pastoral care not included in the normal operating budget of the parish. Requests are made in writing to the Vestry prior to annual meeting of the parish in January, with action on the requests completed before Easter.
To achieve this objective, the Church seeks to create a conservative, well diversified, and balanced portfolio of high quality equity, fixed income, and money market securities. The Vestry has determined that one or more outside investment managers shall be retained to ensure that all investments are managed in both a prudent and professional manner and in compliance with the stated investmentguidelines.
Annual Withdrawal Formula
Distributions will be calculated annually after the net total return for the fund has been determined. Distributions may be that portion of return in excess of the prior year's rate of inflation, up to a maximum of 10 percent. Returns in excess of inflation plus 10 percent will be reinvested for the future growth of the endowment.
The Endowment Fund Committee shall consist of five members, all of whom shall be members of the Church and appointed by the Rector of the Church. The Church Treasurer will always be a member of the committee. Members shall serve a three year term. The appointments by the Rector shall be announced at the annual meeting. No member shall serve more than two consecutive terms. The committee shall meet at least quarterly. A quorum shall consist of three members. The committee shall render a full and complete account of the administration of the funds at the annual meeting. The committee shall make recommendations to the Vestry as to the hiring of investment managers and further be responsible for educating the congregation on the purpose of the Endowment Fund and the various gifting programs available to the congregation.
The Vestry recognizes the necessity of a long-term horizon when formulating investment policies and strategies. However, shorter term investment goals have been established and are intended to provide quantifiable benchmarks to measure and evaluate manager and overall fund performance.
The specific investment goals of the Endowment Fund of the Church are as follows:
- To earn an average annual rate of return over the long term which exceeds the rate of inflation by 5.0%
- To earn a total rate of return over the long term which exceeds the return of a Target Index. The Target Index is defined as 60% investment in the Standard & Poor's 500 Stock Index, and a 40% investment in the Merrill Lynch Government/Corporate Bond Index.
The Investment Committee has established a target asset allocation of 60% equity securities and 40% fixed income securities.
Investments in equity securities shall be limited to those actively traded on a major stock exchange or NASDAQ. No more than 5% of an investment manager's equity portfolio may be invested in the shares of a single corporate issuer. Investments in the shares of companies that have been publicly traded for less than one year are limited to no more than 5% of the market value of the total equity portfolio.
Investment in all corporate fixed income securities shall be limited to those rated "A," or higher by Moody's or Standard & Poor's rating services. No more than 10% of the total fixed income portfolio shall be invested in the securities of any single corporate issuer. The total investments in corporate bonds and bonds issued by governments other than the United States Government shall be limited to 50% of any fixed income portfolio. There is no limit imposed on investments in fixed income securities issued directly by the United States Government.
Investments in cash equivalents securities shall be limited to: a) the money market fund provided by the fund custodian, b) direct obligations of the United States Government with a maturity of one year or less, c) commercial paper with a maturity of 270 days or less that is rates A-1 or higher by Standard & Poor's or P-1 or higher by Moody's, d) bankers acceptances issued by the largest fifty banks in the United States.
Members of the committee can assist you in making a gift to the Endowment Fund, either through your will or through several other options which can provide substantial tax benefits and, in some cases, continuing income to you until your death.
Gifting options would include the following:
- Cash. A general donation of cash is a simple and direct method of giving.
- Stocks and Securities. Gifts of stocks or other investments which have grown in value that you have held more than one year may result in a significant gift at a low net cost to the donor.
- Real Property. There are various options concerning a gift of real property which include donating the property outright or reserving a life estate. Even when possession is retained, the donor may receive an immediate charitable deduction.Life Insurance. When life insurance is no longer needed, a paid-up policy which is gifted may be deducted as a gift for its approximate replacement value.