Investment Policy Statement for The Grace Foundation
Updated April, 2022
Bank Account: US Bank Checking (Checking)
Brokerage Accounts: Charles Schwab:
- RCLS Bobcat Fund (General Fund)
- RCLS Andrea Hanson Fund (Scholarship Fund)
The primary return objective is inflation-adjusted capital appreciation. Benchmark for large cap equities will be the S&P 500 index, benchmark for small/mid cap equities will be the Russell 2000 index, benchmark for international equities will be the MSCI EAFE index, benchmark for fixed income will be the Bloomberg Aggregate Bond Index, and the benchmark for real estate will be the MSCI US Investable Market Real Estate 25/50 Index.
Funds in both the General Fund and Scholarship Fund are intended for long-term investment. No less than 100 percent of the account shall be invested in a globally diversified stock portfolio across the following asset classes: U.S. large caps, U.S. small caps, international, and real estate. Any money needed to be accessed within five years shall be invested in a U.S. Government money market fund.
Fund Distribution Policy:
At the discretion of the board, at the end of each calendar year, an annual grant may be made. This grant shall be calculated as follows. Calculate the trailing 12 quarter average account balance and obtain the same period 12 quarter average trailing return from Schwab performance report. The annual grant amount is then the average balance multiplied by the return not to exceed 5% in any one year. Refer to “Fund Distribution Formula Spreadsheet.”
Allocation of Gifts Received:
The following allocation formula shall apply to all incoming revenue pledges and gifts received by The Grace Foundation:
15% Rochester Central Lutheran School (RCLS)
70% RCLS General Endowment Account
All funds held for near-term Administrative and RCLS obligations shall be held in checking or in a money market account.
General Fund: Greater than five years – Scholarship Fund: Greater than five years
The Grace Foundation is a non-profit organization and is tax-exempt.
Unique Preferences and Circumstances:
Investments shall be made following a passive index-based approach using no-load mutual funds or exchange traded funds. The portfolio shall be reviewed at least annually and rebalanced, if necessary, to stay within the target allocation described below. Deviations greater than 5% require rebalancing. Underspent administrative funds are to be reallocated at the Board’s discretion. Movement of funds from one account to another may be made at the Board’s discretion.
Target Asset Allocation – Long-term Investments
Large Cap =40-50%
Small Cap =20-30%
International = 15-25%
Real Estate = 0-10%
Cash/Fixed Income =0-10%
Investment Committee: The Grace Foundation Board of Directors