ENDOWMENT FUND SERVICES

The Endowment Fund's Beginnings

The American Baptist Foundation Endowment Fund was established in 1994 in response to donors' requests that the Foundation manage permanent endowment funds.

Moreover, many donors wished to provide support to several American Baptist-related ministries with endowed funds, but they preferred to have the funds in one account. In some instances the ministries they wished to benefit, such as their local churches, did not have permanent endowment funds.


A second reason for establishing the fund was to offer investment services for American Baptist organizations. Organizations are afforded the opportunity to use the endowment fund as they would a mutual fund. As a convenience, accounts can be accessed via this website. The Account Access link at the top of this page is provided for those who have requested this service.

The Endowment Fund's Primary Objectives

  1. To provide individual donors with a place in which to locate permanent funds intended to support a named ministry or mission with future income.
  2. To provide American Baptist churches and organizations with a place in which they can invest funds intended for long-term growth and stability. These funds often include endowment and memorial gift holdings.

The Endowment Fund's Advantages

The advantages for both individuals and organizations are that the fund:

  • is professionally managed
  • satisfies social and ethical responsibilities in investing
  • has size as well as the diversity in investments that size allows
  • is housed with an American Baptist "family member"

How the Fund is Managed

Money invested in the Fund becomes part of a pool of investment funds. The funds are professionally managed, overseen, and monitored by the Foundation Finance Committee, whose members are chosen for their expertise in investment and money management.

The Committee may make changes from time to time, but at present all fixed income money is placed in PIMCO Total Return III (bond fund). The stock portion of the portfolio is invested in four actively managed accounts.

Management Costs

The total cost for both the outside investment managers and the Foundation is about 0.9 percent annually. Our goal is to keep the cost below 1.0 percent.

Fund Size

The current balance of the Endowment Fund is in excess of $45 million. The Foundation also manages annuity reserve funds and serves as trustee for charitable remainder trusts. The total of all assets managed by the Foundation exceeds $75 million.

Asset Allocation

Investors in the Endowment Fund may select from one or more of three different portfolios: Blended Portfolio, Fixed-Income Portfolio, and Stock Portfolio. Most participants select the Blended Portfolio that has a standard blend of 60% stocks and 40% bonds. This 60%-40% allocation varies from time to time.

Results

Although there is no guarantee that past performance will be duplicated in the future, for reference purposes, the total annualized return (income, realized capital gains, and unrealized capital gains) for the funds and their corresponding benchmarks as of 12/31/07 was:

 

             Foundation

              Benchmark
  1 year 5 year 1 year 5 year
Blended Portfolio

5.91%

9.46%

 4.89%

8.42%
Fixed Income Portfolio 7.96% 4.65%  6.97% 4.48%
Stock Portfolio

5.08%

11.58%

 3.50%

10.78%

The benchmark consists of the Lehman Brothers Aggregate Bond Index for bonds, the S&P 500 Index for stocks and a blend of 40% of the Lehman Index and 60% of the S&P Index for the blended portfolio.

Socially Responsible Investing

Fiduciary responsibility directs that the Fund achieve competitive, risk-adjusted returns. In addition, it is the goal of the Foundation Finance Committee to manage the funds in a socially responsible manner. The social screens recommended by the General Board of American Baptist Churches USA (ABCUSA) include gambling, defense, tobacco, and alcohol and are currently employed for all stock and bond investments. In addition, ABCUSA and particular money managers may have additional screens in place from time to time to address issues related to social or environmental concerns.

Who May Participate

Any American Baptist-related organization may participate in the Fund. Outright charitable gifts from individuals wishing to create or add to an endowment for an American Baptist organization are also accepted.

Starting Balance and Deposits

A minimal initial deposit of $10,000 is required to establish a named account within the Fund. Thereafter there is no minimum for additions to the account. Each participant may establish up to four separate accounts within the Fund.

Purchases and Redemptions

Units in the fund are purchased at the start of the month at the then-current value. Redemptions by a church, region or other American Baptist organization can be made at month's end, provided notification is made at least five business days in advance. Deposits by individuals are accepted as outright charitable gifts and, therefore, are not redeemable.

Payout and Reporting

The Fund declares a quarterly dividend per unit. The amount is determined in the third quarter of the previous year and is based upon a rolling average of the unit value over the prior twenty quarters. This is done to smooth out any abrupt ups or downs in investment results. The averaging results in an annual payout of approximately 5% of the current market value of the units. In certain instances where the above payout is not agreeable for a particular participant, a different payout may be negotiated.

Quarterly reports of performance and current evaluation are available upon request. You can also review an online summary of the endowment fund investments and the performance of those investments since 1996.

Invitation

For more detailed information on the American Baptist Foundation Endowment Fund, including an application form, please e-mail John Jacobs or call 1-800-222-3872, Ext. 2035.

The above is for information purposes only and is not a prospectus.