ENDOWMENT FUND POLICIES AND GUIDELINES

Purpose

This Investment Policy Statement (IPS) establishes the FUND objectives, investment philosophy, investment objectives, constraints, strategic asset allocation, and rebalancing guidelines for managing the investments of the FUND. The IPS also sets forth implementation and monitoring guidelines for the Board of Trustees (hereinafter “the Board”), reporting requirements and an annual review of the IPS. This initial investment policy is to be amended by members to reflect the general letter and spirit of the guidelines.

Responsibility

The ultimate responsibility for managing the FUND resides with the Board which has chosen to delegate portions of its responsibility to the FUND manager, whom will administer the portfolio of the FUND in accordance with these guidelines, as adopted and amended from time to time. These guidelines shall be reviewed at least annually by the FUND Manager to determine whether they should be amended or remain unchanged. The Board may choose to employ an outside investment manager.

Conflicts of Interest

All members of the Board shall be prohibited from also serving as an outside investment manager to the FUND, or from receiving compensation for serving as an investment adviser to the FUND or the FUND Manager. Any outside investment manager or investment adviser to the FUND or the FUND Manager who has potential conflicts of interest shall disclose such conflicts of interest in writing to the Board. Prior to the hiring of such a manager or adviser, the FUND Manager must approve the waiver of such conflicts of interest, at the recommendation of the Board.

FUND Objectives:

The assets of the FUND are to be invested with the same care, skill and diligence that a prudent investor would exercise in investing institutional endowment FUNDs. The primary objective will be to provide long-term growth of principal and income without undue exposure to risk.

Investment Philosophy

The FUND Manager, under the direction of the Board, believes the best approach to pursue the highest risk-adjusted long-term investment return is through an asset allocation strategy. The FUND Manager will not attempt to “time the market” by entering or exiting the investment strategy based upon perceived market swings.

To carry out its duty, the FUND Manager will generally research, select, and monitor high quality asset managers to implement Strategic Asset Allocation. The FUND Manager must at all times strive to make sustainable investments with the FUND’s Properties.

Investment Guidelines

Time Horizon:

The FUND has a perpetual time horizon normally associated with endowments.

Risk Tolerance:

Because of its long-term time horizon, the FUND can tolerate some interim fluctuation in market value and rates of return in order to achieve its objectives. High level risk, high volatility and low-quality rated investments, however, are to be avoided. In general, the asset allocation of the FUND will reflect moderate risk tolerance based on an overall target of consecutive growth.

Prohibited Investments:

In keeping with the social mission of the FUND, the FUND Manager shall, where practical, not invest in any securities, public or private, of businesses that derive a substantial portion of their revenue from the production or sale of armaments, alcohol, tobacco, pornography, or gambling.

Additionally, as directed in writing from the Board, the FUND Manager may, from time to time, be restricted from investing in securities, public or private, of businesses that derive any revenue from sales conducted in countries whose governments are sanctioning explicitly or implicitly the pursuit of a policy of genocide, ethnic cleansing, human trafficking, or other social injustices, as determined by the sole discretion of the Board. In such an instance, it will be the responsibility of the FUND Manager to contact all outside investment managers to inquire as to any current holdings affected by this restriction and determine an appropriate strategy for divesting the affected holdings within a reasonable time frame.

Portfolio Diversification:

The investment objectives should be achieved through a diversified portfolio.

Investment Discretion:

These guidelines are not intended to restrict or impede the efforts of the FUND Manager to attain the FUND’s objectives, nor are they intended to exclude the FUND Manager from taking advantage of appropriate opportunities as they arise. The FUND Manager shall have discretion and flexibility to implement the objectives and policies herein set forth.

Investment Goals

While maintaining the asset mix within the above guidelines, the FUND Manager accepts a risk level for the FUND’s overall investment program that is intended to produce a total annual return adequate to cover these components: expenditures from the FUND (as determined annually by the FUND Manager under the Spending Rule Policy), inflation and growth of the FUND.

Reporting

The quarterly report provided by the FUND Manager to the Vestry will include the FUND value, any changes in the asset allocation strategy, and the investment performance. The report shall reflect compliance with the objectives, policies and guidelines set forth herein.

Investment Policy Review

The FUND Manager together with the Board will review this IPS at least annually to determine whether stated investment objectives are still relevant and the continued feasibility of achieving the same. It is not expected that the IPS will change frequently. In particular, short-term changes in the financial markets should not require adjustments to the IPS.

Spending Rule Policy

Money will be distributed from the FUND upon written request of the FUND Manager and with the approval of the Board for those uses which conform to the purposes and restrictions established by donors or incorporated in the Enabling Resolution. FUNDs available for distribution will be determined by using a total return principle, i.e., return derived from dividends and interest as well as realized and unrealized capital gains.

The percentage of the FUND made available for distribution shall be determined each year by the Board.

Any unexpended funds from those available for distribution in a given year will be accrued and will continue to be considered available for distribution in subsequent years unless otherwise designated by action of the Board with the approval of the fund owners. Expenses related to the management and administration of the FUND will be deducted from the funds available for distribution.

Disposition of Bequests Policy

This policy statement governs the disposition of bequests which, for purposes of this statement, will mean any type of gift in which the assets are transferred upon the death of the donor. The assets may be in any form, such as cash, securities, personal property, real property, etc.

The bequest may identify the beneficiary in one of two general ways: Kents’ FUND or some other wording such as the Kenya Ear Nose and Throat Society Endowment FUND. These bequests can be of two general types: (a) Restricted: The donor has identified a specific purpose(s) to which the FUNDs

should be directed. The FUND Manager will guarantee that the use(s) to which those FUNDs are applied is faithful to the donors wishes. The FUNDs may be directed to their designated purpose(s) either as an endowment, in which case they normally would become a designated FUND within the Endowment FUND, or by direct expenditure of the FUNDs through the Treasurer of the Kent’s FUND. (b) Unrestricted: The expectation is that such a bequest will be transferred to the Endowment FUND and allocated by the FUND Manager with approval of the Board to a specific designated FUND or FUNDs within the Endowment FUND. Such transfers are intended to be held in perpetuity.

 

This policy specifically acknowledges that from time to time truly extraordinary needs of the Parish may arise to necessitate an exception to this policy. In such instances the following procedure will apply: The members of the Kenya Ear Nose and Throat Society through their authorized system will assess the particular circumstances giving rise to a perceived need to make an exception to the policy. Such circumstances should be judged to be truly extraordinary and that no other financial resources of the FUND are available or are expected to become available in time to fulfill the urgent need. If an exception is deemed appropriate, the members of the Kenya Ear Nose and Throat Society through their authorized system will make a recommendation. Final authority for granting such an

exception to the policy will rest with the Board. Bequests designating the Endowment FUND as beneficiary are automatically transferred to the Endowment FUND upon receipt. If the bequest was given for a designated purpose, then the value of the assets will be applied to establish a designated FUND of the Endowment FUND, as provided for in a separate policy. If the bequest to the Endowment FUND is otherwise undesignated, the assets will be directed to that portion of the corpus of the Endowment FUND where earnings are unrestricted.

Donor-Designated FUND Policy

A separate and designated FUND within the FUND may be established for gifts in the amount of Kshs. 100,000/- or more. These assets are merged with other assets of the FUND for investment purposes, but the identity and designated purpose of each FUND is preserved individually.

Gift Acceptance Policy

Purpose

This Gift Acceptance Policy will provide guidelines to representatives of KENTS or the FUND who may be involved in the acceptance of gifts, to outside advisors who may assist in the gift planning process, and to prospective donors who may wish to make gifts to the KENTS (on behalf of the FUND) or the FUND. This policy is intended only as a guide and allows for some flexibility on a case-by-case basis. The gift review process outlined here, however, is intended to be followed closely.

Gift Acceptance

The FUND Manager, upon the advice of the Gift Review Committee, reserves the right to decline any gift that does not further the mission of the FUND. Also, any gifts that would create an administrative burden or cause the FUND to incur excessive expenses may be declined.

Gift Review Committee

Any questions which may arise in the review and acceptance of gifts to FUND will be referred to The Gift Review Committee will be established by the Society. The Committee, unless otherwise designated by the FUND Manager, will be comprised of the full Endowment FUND Board.

Cash

  1. All gifts by cheque shall be accepted by the FUND regardless of the amount. Gifts of an amount less than Kshs. 100,000/- will be added to a current designated category of the Endowment FUND or spent according to any donor restriction and as approved by Board.
  2. Cheques shall be made payable to the FUND. In no event shall a cheque be made payable to an individual who represents KENTS or the FUND in any capacity.

Publicly Traded Securities

  1. Readily marketable securities, such as those traded on a stock exchange, can be accepted by the FUND or KENTS on behalf of the FUND.
  2. A gift of securities shall usually be liquidated immediately.

Privately Held Securities

  1. Non-publicly traded securities may be accepted after consultation with the Gift Review Committee.
  2. The Gift Review Committee will explore methods for liquidation of the securities through redemption or sale prior to acceptance. The Gift Review Committee will try to determine:
  • An estimate of fair market value
  • Any restrictions on transfer
  • Whether and when an initial public offering might be anticipated
  1. No commitment for re-purchase of closely held securities shall be made prior to completion of the gift of the securities.

Real Estate

  1. Any gift of real estate must be reviewed by the Gift Review Committee.
  2. The property must be transferred to the FUND prior to any formal offer or contract for purchase is made.
  3. The donor may be asked to pay for all or a portion of the following:
  • Maintenance costs.
  • Ground taxes.
  • The broker’s commission and other costs of sale.
  • Valuation costs.

Life Insurance

  1. A gift of a life insurance policy must be referred to the Gift Review Committee.
  2. The FUND can be named a contingent beneficiary or the beneficiary of a percentage of a life insurance policy

Tangible Personal Property

  1. Any gift of tangible personal property shall be referred to the Gift Review Committee prior to acceptance.
  2. Gifts of jewellery, artwork, collections, equipment and software shall be assessed for their value to Your Parish Episcopal Church. Their value may be realized either by being sold or used in connection with the FUND’s exempt.