Selecting a Model Portfolio

To purchase units in one or more the Foundation’s Pools, each entity or individual will select the appropriate Model Portfolio that matches their investment objectives.  When referring to the asset allocation within each Model Portfolio, the Stock Pool allocation will precede the Fixed Income Pool allocation, then the Alternative Investment Pool;  for example, the Balanced Income Model Portfolio is a 38/57/5 mix, i.e. 38% Stock Pool/57% Fixed Income Pool/5% Alternative Investment Pool.

The Custom Model Portfolios offer entities and individuals additional asset allocation strategies to meet their investment objectives.  For instance, a church that wants slightly more growth than the Balanced Growth Model Portfolio may select the Weighted Growth & Income Model Portfolio; 72% Stock Pool/23% Fixed Income Pool/5% Alternative Investment Pool.

The Endowment Model Portfolios

The Endowment Model Portfolios, established January 1, 2003, are designed for church endowment funds that, by definition, are long-term investments.  There are two Endowment Model Portfolios, one that distributes the calculated income and the other that reinvests the earnings.  These Endowment Model Portfolios follow the fundamental principles set forth by the Uniform Prudent Management of Institutional Funds Act of 2008, NH RSA Ch. 292-B (which allows for distributions from capital appreciation), as a way to address the church trustees’ fiduciary responsibility to invest endowed funds such as to provide both income and a hedge against inflation.  The Endowment Model Portfolios will have a payout amount that is determined annually by the Foundation’s Investment Committee; the rate of distribution will be a percentage, up to 7% but normally in the 3-5% range per year, of the market value of the Model Portfolios (comprised of units of Stock, Fixed Income, and Alternative Investment Pools) calculated using a 3-year (twelve quarters) rolling average.  Distributions will accrue monthly, and be paid quarterly.  Using the valuation of the Model Portfolios over a 3-year period smoothes out market volatility, helps maintain a predictable income stream for the church, and allows for the growth of the endowment.

NOTE:  During periods of market decline, if capital appreciation, dividends and interest fall short of the pre-set payout percentage in a given year, the distribution may result in a return of principal.

Trustee Responsibilities (under the 1972 Uniform Management of Institutional Funds Act

•  It is the duty of church trustees to preserve the historic dollar value of the gift(s) made by donors or the original corpus of the   endowment, as that may not be expended.  The “historic dollar value” means the value of the assets when originally given or as determined “in good faith” by church trustees.

•  For New Hampshire churches and agencies, under the 2008 Uniform Prudent Management of Institutional Funds Act, NH RSA Ch. 292-B, trustees must take into consideration the historic dollar value of their endowment funds.  If an institution has endowment funds with an aggregate value of less than $2,000,000, the institution shall notify the attorney general at least 60 days prior to an appropriation for expenditure of an amount that would cause the value of the institution's endowment funds to fall below the aggregate historic dollar value of the institution's endowment funds.  During the 60-day period, the attorney general may require the institution to obtain court approval for the proposed expenditure.

•  Additionally, church trustees must use income in accordance with any gift vehicle restrictions that may apply to the given endowment.  For example, an endowment created by a Will to provide scholarships may not be used to repair the church organ.

Click Here for detailed description of the "Pools" and "Model Portfolios"

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