Jesse Lee Legacy Fund
Policy, Objectives, and Guidelines
1. Mission Statement
The Jesse Lee Legacy Fund (JLLF) is an endowment program that provides a way for all who want to support the Jesse Lee Memorial United Methodist Church (the “Church”) and its mission to do so through a perpetual source of income. In contributing to the fund, which will support the church’s ongoing financial security, gifts may be designated for specific activities or be unrestricted for the greatest needs of the church.
The program will fully support the fulfillment of the Church’s mission, which is to advance its core values of celebrating relationships in worship; witnessing God’s love in service; offering learning opportunities; caring for others; and sharing the love of Jesus Christ. Through the program, and through supporting our mission and core values, we can ensure that this Christian Community thrives well into future generations.
2. Purpose and Scope of This Document
This document, known as the JLLF Policy, Objectives and Guidelines, or “JLLF Policy” for short, describes:
- How the JLLF (the “Program”) will be overseen and managed;
- Investment goals of the Program;
- The polices regarding appropriations from the Program funds; and
- Other policies and guidelines related to the Program, including standards required to meet applicable laws.
All donations to the JLLF shall be subject to the terms herein, unless otherwise stated in a gift instrument executed by a donor and accepted by the Church.
3. Responsibility for Management and Oversight
A JLLF Committee (“Committee”) shall be established by a Charge Conference of the Church, and will report to the Church’s Board of Trustees (“Trustees”). The Committee will carry out the following objectives and responsibilities:
- Define and assign the responsibilities of all parties related to the Program;
- Outline with clarity the investment goals and objectives of the Program and the Program’s assets;
- Establish an investment policy or policies consistent with the Program objectives and this document;
- Oversee, provide guidance, and communicate parameters/limitations with respect to investment managers and/or fiduciaries regarding the Program assets.
- Evaluate investment results in accordance with evaluation criteria developed by the Committee in accordance with the Program objectives and policies;
- Ensure the management of the Program assets complies with the policies set forth in this document, as well as applicable laws.
- Review terms of proposed gifts (e.g., requested designations and restrictions, proposed donation of non-cash assets) and make recommendations regarding acceptance/non-acceptance of such terms to the Trustees ;
- As necessary, prudently interview, select, and appoint persons and/or fiduciaries who are professionally capable of managing the Program in a manner likely to achieve the stated objectives of the Program, and ensure that appropriate documentation is in place with such persons regarding their services and fees. All fees to investment professionals shall be reasonable and approved by the Committee
- Report to the Church’s Treasurer, Trustees and congregation at least annually the activity related to the Program funds, including performance, contribution amounts, and draws from the Program funds, and report fund balances.
- Review the Program’s compliance with investment guidelines at least annually.
- Report to Treasurer, Trustees, and congregation any significant changes to Program asset allocation strategy in response to economic conditions.
4. Contributions into JLLF Program
In general, any person or organization may contribute any amount into a Program fund. To be placed into the Programs funds, contributions must be accompanied by a designation making it clear that it is to be contributed to the Program (e.g., designation of “JLLF,” “Legacy Fund” “Jesse Lee Endowment” or words that similarly make clear that the contribution is intended as part of the JLLF.) However, any proposed contribution that does not meet the following JLLF Contribution Policies must be approved by the Trustees before it will be accepted.
JLLF Contribution Policy
- Cash or cash-convertible contributions will be accepted in any amount, subject to the other terms of this Contributions Policy. “Cash-convertible” means publicly-traded stocks, bonds and other instruments that can readily be sold or redeemed for cash immediately after receipt by the JLLF. Real estate and personal property are not considered cash-convertible.
- Contributions of assets that are not cash or cash-convertible are subject to approval by the Trustees. It is the Program’s intent to convert any in-kind contributions to cash as quickly as is prudent and not to hold and maintain real estate, personal property, or other in-kind assets. In deciding how quickly to convert the in-kind asset to cash, the Committee will consider the risks associated with such timing, and the speed, ease and expense associated with holding versus converting the asset into cash.
- Contributions to JLLF that are undesignated will be placed in a Program fund to be used for any purpose consistent with the Church’s mission as determined through existing Church allocation and governance processes.
- Subject to the other terms of this Contributions Policy, contributions in any amount will be accepted into preexisting designated funds within the Program, provided that the contribution does not place any additional or different designation or restriction on the contribution than is already established by the preexisting designated fund.
- Contributions that propose designation for a new purpose (i.e., not simply contributed to a preexisting designated fund) or that contain restrictions that do not already exist in a preexisting designated fund for which the contribution is proposed, must be approved by the Trustees before acceptance. In general, new purpose designations or restrictions will not be accepted unless actual or pledged contribution is at least $15,000.
- Contributions conditioned on terms specifying investment strategies or investment conditions that vary from this document or as otherwise established by the Committee for the JLLF will generally not be accepted into the JLLF.
- Any contributions to the Program actually received by the Church but requiring acceptance may be invested temporarily into a cash or core account if the contribution is not accepted, the contribution will be returned to the donor. No interest or earnings will be payable upon such return.
5. Principles, Objectives and Guidelines for Investment of Funds.
- Program funds shall be invested in the long term interests of the Church and the purposes for which the funds are designated, with care, skill, prudence and diligence under circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matter would use in the investment of a fund of like character and with like aims.
- Investment of Program funds shall be prudently diversified so as to mitigate the risk of large losses from individual securities or securities from a single industry sector.
- The Committee may, but is not required to, employ one or more investment managers of varying styles and philosophies to attain diversification and the JLLF objectives. The Committee will establish guidelines for any investment managers to follow that are consistent with the principles, objectives and guidelines of this document.
- Risk tolerance shall be commensurate with a long-term, enduring investment horizon with a commensurate tolerance for volatility.
- Pooling: It is the Committee’s intent that all monies within the JLLF will be pooled for investment purposes regardless whether they are comprised of different funds with differing purpose designations. Investment returns will be allocated pro-rata to funds with differing designations on a monthly basis based on the balance of each fund upon closing of the last day of the preceding month.
6. Investment Objectives
- The investment strategy of JLLF is to emphasize total return: the aggregate return from capital appreciation and dividend and interest income.
- Specifically, the primary objective in investing the JLLF assets shall be preservation of purchasing power: to achieve returns in excess of the rate of inflation over the investment horizon in order to preserve purchasing power of the JLLF assets. Risk control is an important element of this investment strategy.
- The secondary objective in investing of the JLLF assets shall be income and growth: to achieve a balanced total return, including both income and capital appreciation.
- Volatility of Returns: The Church and the Committee understand that in order to achieve the above objectives, the Program funds will experience volatility of returns and fluctuations of market value.
- Socially-Responsible Investment Objective: Where JLLF assets are to be invested in mutual funds or other investment vehicles that include securities of businesses, such funds/investment vehicles shall be those whose investment objectives incorporate social responsibility consistent with the objectives outlined by the United Methodist Church’s benefits and pension investment body (currently called WESPATH), in their “Equity Social Values Plus Fund.” The Committee will review compliance with this objective of socially responsible investing on an annual basis, and make adjustments that are appropriate to meet the objective, but will not be required to make adjustments more frequently even if it learns during the interim period that this objective is not currently being satisfied.
7. Asset Allocation Guidelines
Based on the policies and objectives outlined above, the Committee and any investment managers it may engage will be guided by the following general asset allocation guidelines:
- 60% of the JLLF funds in equities, including domestic and international stocks, stock mutual funds, stock ETF’s, ADRs and similar equity vehicles, and Real Estate Investment Trust (REITs) investments.
- 40% of the JLLF funds in fixed income investments such as corporate or government bonds or mutual funds/ETFs that are primarily invested in bonds and other fixed income investments.
The foregoing are guidelines only, and may be adjusted as appropriate by the Committee to respond to changing economic conditions. The Committee may invest JLLF funds in alternative investments not specifically listed above to the extent such investments are consistent with prudent investing standards set forth in the law and in this document. In addition to asset allocation described above, a cash core account may be established as appropriate to temporarily hold donations that are being considered for acceptance, to settle trades, and to hold cash donations for investment into equities or bonds over a time horizon to mitigate volatility risk.
Due to increases or decreases in particular investments, the actual asset allocation of the JLLF funds at any given time will vary – potentially quite substantially – from the guidelines set forth above. The Committee will not be required to continuously or frequently assess and rebalance the funds. Rather, the Committee – or its designated fund manager(s) will review the asset allocation on an annual basis and rebalance as appropriate. In the event that the Committee decides to substantially vary from the allocation guidelines described above, it will report this, and the reason for the variation, to the Church in the JLLF’s annual report.
8. Appropriation of Funds
The Church Trustees shall receive advice from the JLLF Committee, and decide on annual appropriation of funds, following guidelines for preservation of principle fund balance. Funds shall be appropriated on or around July 1 of each calendar year. Appropriation shall be accomplished by moving appropriated funds out of the JLLF investments into a bank account or other investment vehicle generally used to hold funds for yearly operating expenses or capital expenses of the Church. As a guideline, annual appropriations should be targeted at and not exceed the average of 4% of each of the ending balances of the funds for the prior 3 years. Exceptions would be as follows:
- A restricted fund balance is less than $10,000 and has been established for more than 10 years, in which case the Trustees, upon recommendation of the Committee may decide to appropriate all or any part of the fund balance for its original purpose.
- No appropriation will generally be made for a specific designated fund within the JLLF unless the appropriation would be at least $400.
- If it is determined by the Trustees that an appropriation for a particular designated-purpose fund will not be needed or is unlikely to be used for the designated purpose during the ensuing fiscal year beginning July 1, the Church will have the option of a) foregoing an appropriation for that year from that designated fund, or b) making an appropriation from that designated fund to be held in a non-JLLF fund account with the same designated purpose until needed. A decision to forego an appropriation from a designated fund will not alter the 4% guideline for appropriations in future years.
9. Modification of Designated Fund Purpose
If the designated purpose of, or restriction on, a JLLF fund becomes illegal, impossible or impracticable to achieve, wasteful, or circumstances occur that would defeat or substantially impair the purpose for which the fund was established, the Church may, with the donors’ consent or as otherwise permitted by law, release or modify, in whole or in part, the designation or restriction and substitute another charitable purpose of Church to which the donors consent, or if a donor is no longer living, substitute a purpose that is as close as is reasonably possible to fulfilling the purpose of the gift and the donors’ actual or probable intention. The Church reserves all rights it may have under cy pres or equitable deviation doctrines to make such modification, and further reserves the right to act under applicable statutes.
10. Adoption and Modification of this Document.
This JLLF Policy document has been adopted by the Church through a Charge Conference, and may be modified by subsequent Charge Conference, with or without recommendation of the Committee.