The economic recession has been far reaching, touching many businesses, not-for-profits and individuals. We know that our valued donors and grantees wonder how they will be affected. That is why in late-February we invited Mike Miller, President of Colonial Consulting and our investment consultant, to speak about the opportunities and challenges community foundations and other charitable endowments face in today’s economy.
Almost 100 donors, advisors and grantees attended a session that provided information about our investment philosophy, asset allocation and performance history. Mike started with a look back on the most recent market fluctuations - noting that liquidation has been driving the market downward with the spreading panic, creating significant losses for virtually all investors. He explained the Community Foundation’s investment strategy, which is based on tactical asset allocation and long-term return objectives. He expects that when markets stabilize and rebound, our endowment will be in a strong position. In addition, our risk management strategy allows the endowment to preserve long-term purchasing power, protecting us from lasting effects of dramatic market fluctuations.
Mike had an optimistic outlook on the next couple of years. He pointed out that low stock prices are usually good news for long-term investors and this year may be an opportune time to acquire securities at bargain prices. He advised that the recovery period could be lengthy, but patience, thorough forward-looking analysis and risk control can help investors such as the Community Foundation weather the storm.
For many years, we have undertaken a consistent and diversified approach to the investment of funds entrusted to us. With eleven different asset classes and nineteen managers in our portfolio, we have managed our risk profile and avoided the asset class concentrations, liquidity and investment manager problems that have affected many other organizations.
The Community Foundation’s investment pool declined by about 27% in 2008 which, while a significant decline, was more positive than most market sectors.