Management of BCF’s endowed assets is conducted in accordance with the Uniform Prudent Management of Institutional Funds Act, ORS 128.305 to 128.336 (UPMIFA). The Act requires that all fiduciaries (members of the Board and Committee as well as Investment Advisors) “shall manage and invest the fund in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.” In performing its duties, BCF considers the following:
BCF’s need to make distributions and to preserve the value of endowed capital
The expected total return from income and appreciation of investments
The possible effects of inflation and/or deflation on the value of endowed capital
General economic conditions
The role that each investment or strategy plays within the overall portfolio
Ensuring that costs are appropriate and reasonable in relation to the assets and the purposes of BCF
Section § 128.322(4) of UPMIFA sets forth a standard of prudence limiting expenditures from any endowed fund to not more than seven percent (7%) of the total fund value.
To determine the “total fund value” for the purpose of calculating annual expenditures, UPMIFA provides that the value of each endowed fund must be averaged over the last twelve consecutive quarters.
To determine the percentage of the total fund value to be approved for annual expenditures (e.g. grants, scholarships and administrative fees), BCF reviews its return on investments for the most recent five year period. If the trailing returns for the most recent 5 year period is 10% or above, the charitable payout will be 5%; if the trailing return is at least 8% but less than 10%, the charitable payout will be 4%; if the trailing return is at least 6% but less than 8%, the charitable pay?out will be 3%. If the trailing returns for the most recent 5 year period is below 6%, the board will make a determination of the charitable payout to be applied based upon a thorough review of each fund.
If necessary, the aforementioned guidelines for charitable payouts will be adjusted to stay within the prudence rule of UPMIFA. No charitable payout will be made from an endowed fund in any year that is 10% or more below the principal value. No charitable payout will be made from an endowed fund in existence for less than two full quarters.