The Board of Directors of The Kinsman Foundation adopts this policy to provide for the management of the investment assets of the Kinsman Foundation.
Goal and Objectives
The goal of the Foundation’s investment activity is to preserve its capital and maximize its return consistent with appropriate risk. Risk is appropriate when the Foundation’s overall investments represent a conservative approach to long-term investing, even though the overall risk of individual holdings or accounts varies. As a minimum objective, the CFO should, after the preservation of capital, invest to earn returns sufficient to provide the IRS minimum annual charitable distribution plus the operating expenses of the Foundation. A second objective is to earn returns sufficient to maintain the relative value of its capital, and a third objective is to increase the relative value of its capital. The Foundation does not invest to promote social goals.
Distinctions of Responsibilities
The Board of Directors is responsible for establishing the policy that guides the investment of the Foundation’s assets. The CFO and CEO are responsible for implementing the policy.
Investment advisors are selected by the CFO and CEO to manage some of the Foundation’s assets in accordance with this policy and objectives assigned by the CFO, but will apply their own judgment concerning relative investment values. In particular, investment advisors are accorded full discretion, within the limits of their assignments, to select individual investments and diversify assets.
Although a large portion of the Foundation’s total investments assets is managed by investment advisors, the Foundation’s two large equity holdings and a smaller portion of the Foundation’s investment assets are managed by the CFO. The CFO’s actions are limited by a June 1994 board resolution stating “that no officer or employee of the Foundation, with respect to the purchase or sale of stock, has the authority to deal in shorts, options, or any of those areas of investing other than buying and selling long; except that investing with qualified asset managers who make use of these techniques in their normal course of investment strategies is not prohibited by this Resolution.”
The CFO manages the Foundation’s non-cash assets such as any real property and tangible personal property subject to this policy in a disciplined and consistent manner, capable of accommodating all those events and occurrences considered reasonable and probable. The CFO’s actions should safeguard the value of non-cash assets for future sale or conversion to charitable use.
The CFO and CEO will manage the investments of the Foundation so that the Foundation is not liable for the tax on jeopardizing investments as provided in IRS Code 4944 and implementing IRS regulations.
Investment in Real and Personal Property
All real estate and real property investments, excluding REITs and capital improvements, must be presented to the full board of directors for approval prior to inclusion in the investment portfolio. Each investment will be considered on an individual basis with consideration given to management costs and effort, as well as risks associated with operating the property.
The investment program should be broadly diversified to limit the impact of large losses in individual investments, and should be managed to take advantage of reasonably foreseeable increases in sectors represented in the Foundation’s portfolio. Diversification of the total invested assets of the Foundation will be managed in a manner that complies with fiduciary standards. In 2001 the Foundation inherited a large amount of two separate stocks. It is the Foundation’s policy to sell five percent of these stocks twice a year until the portfolio is balanced with no more than ten percent of the portfolio in any given stock.
The Foundation exercises proxies on the investments it manages directly and delegates the responsibility for other proxies to the individual investment advisors. It expects proxies to be voted vigorously and in the best interests of the Foundation.
Over reasonable measurement periods, the rate of return earned by the Foundation’s assets and by individual advisors should be compared with appropriate market indices, equalizing the comparison as best possible. Investment advisors are typically chosen to manage specific asset types, and the Foundation does not encourage style drift.