In Their Words: Wes Freeland and FIC Chairperson Bob Salisbury

Wes Freeland, who recently retired after 15 years at the Community Foundation, and Bob Salisbury, chairperson of the Community Foundation’s Financial Investment Committee, answer questions about our investment performance.

How are the Community Foundation’s investments handled?

Since 2005, the Community Foundation has partnered with the City of Kalamazoo and Kalamazoo County, using a group of seven national investment management firms which invest its core assets. At June 30, core assets were $282 million, or 72 percent of our $392 million in total assets as of June 30. These managers are directly accountable to the Financial Investment Committee, which in turn, is supported by an investment consultant.

What is the investment model?

The model is the investment policy and strategy developed and managed by the City/County/Foundation Investment Committee. The model began with the City’s retirement assets in 1981. Then in 1987, the County began using the same model for its retirement assets. The model was brought to the Community Foundation in 2005.

What is the value of a shared model?

First, each of the institutions’ investment committees consists of the same members, although the Community Foundation’s Financial Investment Committee also includes a member of the board of trustees. Each of its members brings an extensive background and depth in the investment management field. Second, with very minor exceptions, each of the institutions retains the same investment managers and employs the same asset allocations. Third, each of the entities shares a common investment consultant. Fourth, the three partners split the annual costs for due diligence work among the three organizations. Combined, about a billion dollars in assets are under management for the three entities. Finally, the CCFIC is a volunteer committee.

How do you benchmark investment performance?

The Community Foundation’s Financial Investment Committee uses performance benchmarks relative to the asset allocation. Administratively, the Community Foundation compares its endowed asset performance to the community foundation field data-base quarterly, which is prepared by the Council on Foundations. Of the 700 community foundations in the U.S., an average of 70 to 170 respond to the quarter, year-to-date, one-, three-, five-, seven-, 10- and 15-year measurement periods. The Community Foundation also compares its performance to the public results of the National Association of College and University Business Officers, which monitors some 800 colleges and universities across the country annually at June 30.

How have the Community Foundation’s investments performed?

Since the model’s 2005 implementation, performance has consistently been within the upper or top quartile of the community foundation field. Additionally, the model has compared strongly to NACUBO’s average performance. Although we have only been using this investment model since latter 2005, it is important to remember that it has been time tested, virtually unchanged, for more than 30 years since it started with the City of Kalamazoo’s leadership and the support of The Upjohn Company’s John Nelson who developed this model.

What about the future?

While it is impossible to predict future investment performance, the Community Foundation’s board and committee are committed to its investment policy and strategy, a disciplined asset allocation policy, regular rebalancing, minimizing fees and expenses, and not reacting to near-term market pressures or new investment fads.

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