Granville-Tolland Dollars for Scholars®
INVESTMENT POLICY
PURPOSE
The purpose of this Investment Policy Guideline is to set forth the investment objectives of the Granville-Tolland Dollars for Scholars® and certain procedures to be followed to achieve that end. This written Investment Policy provides the framework for decision making and is intended to provide continuity in the investment approach of present and future Board Members of the Granville-Tolland Dollars for Scholars.
OBJECTIVES OF THE INVESTMENT POLICY
The investment objectives of the Granville-Tolland Dollars for Scholars are:
- to manage its assets with prudence, skill, and diligence
- to maximize the long-term benefit intended by donors
- to produce current income to support the programs of the organization and donor objectives and to achieve growth of both principal value and income over time sufficient to preserve or increase the purchasing power of the assets, thus protecting the assets against inflation.
These objectives will be pursued in accord with the following priorities:
Consistency: Growth achieved in a reasonably predictable manner where fluctuations in market value are minimized.
Capital Protection: Strive for a level of safety necessary to not only protect the endowment's principal but, also, offset inflationary erosion.
Capital Appreciation: Achieve growth primarily through a portfolio of mutual funds and/or companies that demonstrate potential to produce a rising stream of earnings and dividends, and through the compounding of dividends and interest over time.
Liquidity: Maintain sufficient liquidity to provide adequate and timely working funds.
AUTHORIZED INVESTMENTS
The Granville-Tolland Dollars for Scholars shall maintain minimum savings and/or checking account balances necessary to fulfill its donor commitments and for other operating expenses. Other investment vehicles in which the Granville-Tolland Dollars for Scholars may invest its funds include the following:
1. Equity investments: The principal category of equity investment will be common stocks, with primary emphasis on high quality, investment grade, dividend-paying stocks in companies that are financially sound and that have favorable prospects for long-term growth of both capital and income. The common stock may be purchased through mutual funds or on an individual company basis.
2. Fixed Income Investments:
Cash and Equivalents: Such investments shall be kept at the level which the Executive Board considers necessary to meet foreseeable short-term liquidity requirements. Such investments shall be made in U.S Treasury securities, money market funds issued by institutions with proven high-quality credit ratings, or pooled money market funds with demonstrably high-quality credit standards and proven records of above-average performance over time.
Bonds and Debentures: A majority of the fixed-income investments shall be invested in securities rated in the three highest categories by Moody's Investors Service or Standard & Poor's Corporation. Fixed-income investments may be purchased individually or through mutual funds.
Certificates of Deposit: CD's issued by credit unions domiciled in the State of Massachusetts, by the state and national banks, and by savings and Loan associations that are:
a) guaranteed or insured by the Federal Deposit Insurance Corporation, other deposit insurance agencies, or their successors; or
b) secured by the pledge of securities in the same manner as is required by the depository bank.
U. S. Obligations: Obligations of the United States or its agencies and instrumentalities.
Massachusetts Obligations: Obligations of the Commonwealth of Massachusetts or its agencies and instruments.
PROFESSIONAL MANAGEMENT
It is the policy of the Granville-Tolland Dollars for Scholars to obtain professional financial consultation or utilize professional management services for the investment of assets. The Executive Board and other committee members shall avoid conflicts of interest that might affect or influence the performance of the investment consultants or investment managers.
ASSET ALLOCATION
The policy on asset allocation shall be to invest in both equity and fixed-income securities so as to provide a balance that will enhance total return while avoiding undue risk concentration in any single asset class or investment category. Such allocation shall be controlled by the percentage guidelines set forth in The Annual Investment Plan.
UNAUTHORIZED INVESTMENTS
Prohibited investments include, but are not limited to:
Commodities and Futures Contracts
Private Placements
Options
Limited Partnerships
Derivatives
Initial Public Offerings
Hedge Fund Investments
RESTRICTED INVESTMENTS
Certain funds are obtained by the Granville-Tolland Dollars for Scholars through donations wherein the donor has placed restrictions on the form of investment. Such funds will be invested in accordance with the donor's requirement, to the extent such requirement is a condition of the gift, and will be excluded from the total pool of available funds subject to the present investment guidelines with respect to asset allocation.
ANNUAL INVESTMENT PLAN
The Annual Investment Plan will serve as the practical application of the concepts enumerated in the investment policy to be followed during the current one year cycle beginning January of each year. The Annual Investment Plan shall address:
Asset Allocation: The specific allocation of the Granville-Tolland Dollars for Scholars's funds among equities, fixed income, and cash.
Spending Policy: Each year, the investment plan will include a spending rate, (i.e. the amount that can be drawn from the investments of the Granville-Tolland Dollars for Scholars to be spent on scholarships or other annual expenses of the organization). If the total return (i.e. income plus capital appreciation) of the endowment during the previous calendar year is less than the rate of inflation (as measured by the Consumer Price Index), then there will be no distribution from the endowment.
Investment Review: The Endowment Committee will be responsible for monitoring the Foundation's investments and making periodic reports to the Executive Board, as specified in the following Periodic Evaluations and Reviews.
PERIODIC EVALUATIONS AND REVIEWS
Investment Policy Review -- The Endowment Committee shall review the investment policy annually as well as the performance of investments and make a report and/or recommendation to the Executive Board.
Annual Investment Review -- The Endowment Committee shall receive regular investment performance reports and shall review the progress of the Annual Investment Plan at least semi-annually. At the beginning of each year, by January 30th, the Endowment Committee shall submit an updated Annual Investment Plan to the Executive Board.
Investment Manager Performance Review -- The Endowment Committee shall require that any investment managers submit a written report of investment performance every calendar quarter.
The Endowment Committee may utilize, if it deems warranted, an independent performance evaluation service to ensure that any investment managers engaged by the Granville-Tolland Dollars for Scholars are competitive in the market and that their performance meets the needs and expectations of the Granville-Tolland Dollars for Scholars with respect to its Investment Policy guidelines. Any expense related to the evaluation must be approved by the Executive Board, prior to undertaking the evaluation.
Spending Policy Review -- It shall be the responsibility of the Endowment Committee to periodically review the spending policy against actual returns in order to make adjustments necessary for the preservation of the endowment's purchasing power and to make recommendations to the Executive Board.
