1. Investment for Community Foundations
Chris Morcom CFP®, CPA(FPS), B.Bus Dip FP
Director/Private Client Adviser

2. The information contained in this presentation is general in nature and is not intended as personal advice. Please obtain advice from your Financial Adviser before acting upon this information

3. Agenda The reason for a Investment Policy
Components of an Investment Policy
Where does advice fit in?
How should investments be monitored
Calculation of grant amounts
Questions

4. The Investment Policy Legislative requirement Good practice
Link your investment policy to your objectives

5. Components of the Investment Policy
Clear objectives related to your foundation

6. Objectives - example GENERAL SHORT TERM (12 MONTHS)
To invest the corpus of the foundation in a way that protects the corpus from loss and achieves the objectives of the foundation
SHORT TERM (12 MONTHS)
Provide access to 4% of capital within 30 days
Provide access to 10% of capital within 90 days

7. Objectives - example MEDIUM TERM (1-5) YEARS
Generate sufficient income to cover expenses and grants
LONG TERM (BEYOND 5 YEARS)
Grow the corpus to maintain the value in Real Terms.

8. Objectives - example LONG TERM (BEYOND 5 YEARS)
Grow the corpus to reach a long term target of $1 million, inclusive of fundraising activities and donations.

9. Components of the Investment Policy
Clear objectives related to your foundation
Measurable targets for income and growth

10. Investment benchmarks - example
INCOME
To achieve a before costs income rate of return of at least 90 days bank bill rate on a rolling 3 year basis.
GROWTH
To achieve growth in the net value of the foundation corpus above the CPI index, as measured by the Global all Groups Index over a rolling 5 year period.

11. Investment benchmarks - example
INVESTMENT POLICY BENCHMARKS
INCOME
To achieve a before costs income rate of return of at least 90 day bank bill rate plus 1% on a rolling 3 year basis.
GROWTH
To achieve growth in the net value of the foundation corpus of 2% above the CPI index, as measured by the Global all Groups Index over a rolling 5 year period.

12. Investment Policy – example reporting - Performance Benchmarks

13. Components of the Investment Policy
Clear objectives related to your foundation
Measurable targets for income and growth
Desired asset allocation

14. Asset Allocation Examples
Asset Allocation Strategy
Asset Class
Target Benchmark
Benchmark Range
Min
Max
Cash at call 4% 0%
100%
Interest Bearing Investments
46%
20%
70%
Equity – Australian
35%
10%
60%
Equity – International 5%
30%
Property
Asset Allocation Strategy
Asset Class
Target Benchmark
Cash at call
10%
Interest Bearing Investments
40%
Equity – Australian
30%
Equity – International
Property

15. Components of the Investment Policy
Clear objectives related to your foundation
Measurable targets for income and growth
Desired asset allocation
Details about types of investments preferred & excluded

16. Investment details - example
PROPERTY
Listed property trust exposure via Exchange Traded Fund
Managed & Private Syndications
Direct Property Investment if appropriate
Unlisted Direct Property Fund
Gearing <50%
Quality Tenants
High Occupancy
EQUITIES – AUSTRALIAN
Investment limited to:
Listed investment companies
Australian companies restricted to the S&P/A SX Exceptions must be specifically approved by Board resolution.
Stock Selection:
Reliable dividend yield, preferably fully franked dividend yield of 3% or greater
Widely held shareholding
Exclude companies that derive most of their revenue from
Provisions of gambling services or the manufacture of gambling machines
Sale or manufacture of armaments
Sale of manufacture of alcohol or tobacco

17. Advice – what to expect and how to access
Focus on core organisation goals & skills
Be clear on what you want
Administration and reporting
Certified Financial Planner

18. Managing your investments
Actively manage your asset allocation
Rebalancing the portfolio

19. Rebalance

20. Calculating Grants
Legislated minimums
Cash flow vs asset growth

21. Recap Investment policy in writing Objectives focussed
Measurable targets for returns and liquidity
Asset allocation
Predictable cash flow
Advice can help

22. Questions

23. Phone:
Address: Level 8/417 St Kilda Road Melbourne VIC 3004