7 minute read
TJF earns top recognition
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Tidewater Jewish Foundation earns recognition for its prudent management of invested funds
Randy Parrish
As investment stewards, Tidewater Jewish Foundation’s Investment Committee recognizes its fiduciary responsibility to oversee the investment of the community’s assets and continues to review TJF’s Investment Policy Statement (IPS) and evaluate its implementation.
TJF’s Investment Committee recently completed an extensive review of the implementation of the “Main Investment Pool” as it is described in the TJF IPS. TJF’s Main Pool of nearly $95 million serves as the primary and default pooled investment vehicle for the community’s long-term assets under TJF’s and its affiliates’ endowed funds. It also serves as the investment pool for many of TJF’s other funds, including donor-advised funds that do not qualify for separate investment accounts as specified under the IPS. Since 2009, the implementation of TJF’s Main Pool has been through the partnership with the Jewish Community Endowment Pool, LLP (JCEP), managed by the Combined Jewish Philanthropies of Greater Boston (CJP).
In early 2021, the TJF Investment Committee began a process to review other “Outsourced Chief Investment Officer” (OCIO) programs with an initial RFI (request for information) and then a more formal RFP (request for proposals) over the summer. Several firms responding to the RFP were selected as finalists for interviews, along with the option of maintaining the implementation of the Main Pool’s investment through the existing partnership with JCEP. At it’s March 14, 2022 meeting, TJF’s board of directors endorsed the TJF Investment Committee’s recommendation to continue the relationship with JCEP for the implementation of TJF’s Main Investment
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Pool.
The third quarter of 2022 ended with the Tidewater Jewish Foundation’s Main Investment Pool posting a quarterly return* of -2.3%, leading its composite benchmark return of -2.9% for the quarter. The JCEP quarterly return ranks in the 4th percentile of the Endowment and Foundation Universe of funds in excess of $50 million. The -10.9% return over the last three quarters, since the current market downturn began early in 2022, exceeds the benchmark as shown below by 200 bps, and ranks in the 10th percentile on a relative basis. All longer-term JCEP returns are also exceeding the composite benchmark.
The JCEP historical performance has generally met the overall objective of supporting ongoing spending needs for community programs. JCEP’s primary investment objective is to attain an average annual real total return (defined as a nominal return net of fees and inflation) of at least 5% over the long term (rolling five-year periods) to support program requirements. This objective may not be achieved in all periods. Prior to these most recent three quarters, when inflation rates approached historic highs, the trailing returns for longer periods exceeded that real 5% return after inflation (CPI-U + 5%). This is not currently the case.
Lower volatility results, in part, from lower participation in market downturns, as is occurring now in 2022. The blue line in the chart below shows how JCEP’s capital preservation traits have generated downside protection, decreasing less when equity markets decline.
In order to continue to support the ongoing spending needs for community programs and preserve the capital for permanent endowments, TJF returns need to be balanced against risk. And risk metrics continue to look favorable, with JCEP demonstrating an upside capture ratio of 111.9% and downside capture ratio of 92.2% when compared to the benchmark over the past 10 years.
One of the most important services that Tidewater Jewish Foundation provides to its donors and affiliates is the prudent management of invested funds. There are clear and quantifiable ways to measure investment performance both in absolute and relative terms, but how can one evaluate the quality of the investment process itself?
For its fiscal years 2011 through 2022, TJF has been awarded a certificate of conformance to the Best Practices under the Global Fiduciary Standard of Excellence. The assessment process is built upon the Fiduciary Quality Management System, as established by the Centre for Fiduciary Excellence. In the execution of The Colony Group’s fourstep assessment process, TJF documents and recordings were reviewed, including: TJF’s Investment Policy Statements and Asset Allocation Analyses, Investment Committee Meeting minutes, and By-Laws, as well as other investment governance records maintained by TJF.
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Virginians are a generous bunch. Giving can be another form of investing.
With the end of the fiscal year closing in, people tend to think more about charitable giving (potential tax breaks as incentives, not withstanding). Noting that in 2021, Americans donated nearly $485 billion, up 4% from the previous year, the personal-finance website WalletHub released its report on the Most Charitable States for 2023.
To determine where the most generous Americans are inspiring others to be more selfless, WalletHub compared the 50 states based on 19 key indicators of charitable behavior. The data set ranges from the volunteer rate to the share of income donated to the share of sheltered homeless.
Generosity in Virginia
(1=Most Charitable; 25=Avg.): 23rd—Charities per Capita 17th—% of Donated Income 19th—% of Population Who Donated Time 3rd—% of Population Who Donated Money 11th—% of Population Collecting/ Distributing Food 21st—Volunteer Rate 9th—Volunteer Hours per Capita
When asked about advice for choosing the right charity, Margaret F. Sloan, Ph.D., director, professor and advisor, Nonprofit and Community Leadership Concentration at James Madison University, says, “The right charity is the charity that resonates with a donor’s values, stewards their money well, and demonstrates impact or the ability to impact the world through its mission.
“Of course, you want to be a wise steward of your funds, so check the organization’s financial outlook through annual or financial reports that transparent organizations will have access to on their websites or you can find financial documents for many charities on Candid, formerly GuideStar,” says Sloan.
“I encourage folks to look across three to five years for a stronger understanding of your charity’s financial health than just a one-year snapshot. Also, some watchdog charities such as the Better Business Bureau’s Wise Giving Alliance or Charity Navigator rate organizations and can offer additional information about an organization’s adherence to best practices regarding board governance or financial reporting, but donors should also know these ratings do not tell much, if any, of the story about an organization’s impact.”
What percentage of income should households donate to charity?
“In short, greater than zero,” says Robert K. Christensen, Ph.D., professor and research fellow at Brigham Young University.
“The benefits of including charitable donations in one’s budget are fairly well documented. Beyond the financial benefits of reducing tax burdens, charitable giving promotes deeper feelings of personal satisfaction, higher morale, and lower stress.
“Identifying the specific proportion of one’s budget that should be dedicated to charitable donation should, like other budget decisions, be systematically reviewed. As particular needs arise, e.g., the pandemic, or as a household’s financial capacity increases, having an up-to-date giving plan is key. Including other members of the household and, when helpful, a financial planner, is a smart approach. Much like planning and budgeting for a vacation, planning and budgeting for giving can be a very rewarding process in and of itself.”
