By Shannon Scott, CFO, Greater Washington Community Foundation
The end of the year is a great time to take stock of our financial choices throughout the year and make changes that may set us up for success in the year ahead. Achieving your philanthropic goals requires informed, strategic, and thoughtful investment options. At the Community Foundation, we have expanded those options to provide you with more opportunities to sustain your fund and increase your capacity to invest in nonprofits now and in the future.
To optimize your philanthropic investment, you can choose from the following to allocate all or part of your fund’s investment.
Community Foundation Investment Options
Combined Investment Fund – This global balanced fund is the most common investment choice for our donors. We manage and minimize risk, diversify the portfolio with quality investments, monitor investments versus benchmarks, and provide diligent committee oversight to put you in position to support current and future programmatic work and grant making. Since inception (in 1998), the fund has earned an annualized return 5.58%, net of investment management fees.
Vanguard Index Funds – In response to our donors’ request for a low-cost indexed funds, The Community Foundation added four new index funds. An index fund is a passively managed fund, meaning that the intent is to match the risk and return of the broad market indexes. These mutual funds attempt to mimic the performance of an index, such as the S&P 500, by owning the same stocks as those in the S&P 500. Its best qualities are limited protections from market anomalies and lower costs due to lower trading volume and less hands-on research. Our existing index funds include an equity fund (Vanguard Institutional Index Fund Institutional Shares) and a fixed income (bond) fund (Vanguard Total Bond Market Index Institutional Shares); two Treasury funds (Treasury Money Market and Short-Term Treasury) became available October 1, 2019.
Impact Investment – Working with Enterprise Community Loan Fund, Inc., we offer a place-based mission investing opportunity for donors. You may allocate a portion of your fund at The Community Foundation to invest in the development of deeply affordable and supportive housing in the region. As part of our Partnership to End Homelessness impact initiative with Enterprise, allocating dollars to this initiative supports our efforts to respond to the homelessness crisis by developing deeply affordable housing for our most marginalized neighbors.
Cash – Keeping your fund 100% liquid in cash is also an option for donors. The average money market rate over the past 13 months is 2.24%, ranging from a high of 2.47% to a current low of 1.62%. This option offers the least amount of risk and the corresponding yield reflects that.
Separately Managed Fund – Finally, if you have over $500,000 in your fund, you may name an external investment advisor to manage your investments.
When making decisions about which of these options is right for you, we encourage you to consider your risk tolerance, grantmaking time horizon, and philanthropic intentions for your fund.
If you would like to learn more about any of these investment options or talk to us about reallocating all or part of your fund’s investment, please contact Shannon Scott or Juliana Mitrojorgji.
This is distributed for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. The information, opinions and views contained herein have not been tailored to the investment objectives of any one individual. Nothing contained herein should be construed as investment advice. Any reference to an investment’s past or potential performance is not and should not be construed as a recommendation or as a guarantee of any specific outcome or profit. Any ideas or strategies discussed herein should not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial objectives, needs, and risk tolerance.