Investment of Funds
All charitable funds at BCF are invested to match the donor’s intent, whether that be immediate grantmaking, long-term preservation of assets, or support of local community impact. Investments are overseen by a volunteer committee of highly experienced investment and financial professionals, listed below.
Endowed funds are invested in the BCF Pool, which is managed with a long-term horizon and aims to produce a relatively stable spendable amount available for grantmaking from year to year.
Non-endowed funds are invested in the Money Market Pool. Donors may elect to allocate a portion of their fund to Invest for More for local impact investments. Donors with a longer time horizon for grants may recommend investment in the BCF Pool.
Donors establishing funds of $5 million or more may recommend an investment strategy and manager for their fund, subject to annual review and approval by the Investment Committee.
Endowed Funds – Calculation of Spendable
Endowed funds are managed using a total return approach, which utilizes both income and capital appreciation. The spendable amount available for grantmaking is calculated annually by applying the spending rate—currently set at 4%-5% depending on the type of fund—to the average of the fund’s principal value for the previous twelve quarters ending each September 30th.
For newly endowed funds, no calculation will be made until at least four quarters have passed. After that time and until the fund has been in existence for twelve full quarters, the average will be based on the number of quarters the fund has been in existence as of each September 30th.
The full amount available for grantmaking is not required to be distributed annually and may be carried forward for future grantmaking.
Invest for More
Funds allocated to Invest for More will support local impact investments in companies, organizations, and funds with the intention of generating a measurable, beneficial social impact as well as a financial return. BCF partners with community development financial institutions (CDFIs) to lend money locally to projects that benefit the Baltimore community, particularly communities of color.
Fund assets allocated to Invest for More will not be available for grantmaking for a period of seven years.
We aim to achieve a blended return of approximately 3.0%. We will ladder the terms of loans and notes, with a term length not to exceed 10 years.
All funds established at BCF are managed as provided by the Investment Policy Statement approved by the Board of Trustees. The Investment Committee oversees asset allocation and rebalancing and selection of index funds.
BCF’s investments are managed in accordance with the Uniform Prudent Management of Institutional Funds Act. This standard requires the exercise of reasonable care, skill and caution in the context of risk and return objectives suited to the Baltimore Community Foundation.
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