Investment Policy

  1. GENERAL INFORMATION
    1. Introduction

      The purpose of this document is to provide a basis for the Minnesota State Colleges and Universities Foundation through its Board of Directors to properly discharge its responsibilities with respect to the maintenance and enhancement of investment funds of the Foundation.

      It is intended that the policy, philosophies, and other guidelines stated herein will be reviewed by the Finance Committee and the Board of Directors periodically, but at a minimum of once a year, and will be updated and modified as required to recognize current market and economic conditions as well as the current income needs of the Foundation.

    2. Goals

      It shall be the policy of the Minnesota State Colleges and Universities Foundation to manage investment funds of the Foundation in such a manner that will:

      1. provide current income to the Foundation to support the current goals and objectives of the Foundation;
      2. optimize, over the long run, the total rate of return on investable assets based on the primary objectives of each respective fund.
    3. Investment Philosophy

      Minnesota State Colleges and Universities Foundation Investment Policy shall follow the “Prudent Investor’s Rule.”

      Investments shall be made with judgment and care, under circumstances then prevailing; which persons of prudence, discretion, and intelligence exercise in management of their own affairs, not for speculation – but for investment, considering the probable safety of their capital as well as the probable income to be derived.

    4. Responsibility for Investment Policy

      The Finance Committee along with the Investment Manager and the Executive Director shall be responsible for the investment and reinvestment of Minnesota State Colleges and Universities Foundation’s investment portfolio(s). The Finance Committee shall have the following authority and responsibilities to act on behalf of the Board of Directors in connection with the investment of these funds:

      1. establishment of investment policies and objectives;
      2. allocation of funds among various investment alternatives as deemed appropriate;
      3. recommendation to the Board of Directors regarding the hiring and termination of relationships with outside investment managers based on their performance and the above policies; and
      4. periodic review of each investment manager with regard to performance results, investment activity, and adherence to policy.
    5. Reporting and Accountability

      It is expected that the Investment Manager shall report not less than quarterly on the performance of the portfolio, including comparative gross returns for the funds and their respective benchmarks, as well as complete accounting of all transactions involving the Foundation assets during the quarter, together with a statement of beginning balance, fees, capital appreciation, income and ending balance for each account. Investment Manager is encouraged to report routinely to the Foundation and twice annually in person to the Finance Committee. Additional meetings with the Committee or Board may be requested.

      Investment Manager performance evaluation will occur continuously, but for the purposes of retention or dismissal shall occur annually using relevant, appropriate indices. Evaluation period begins on July 1, the first day of the Foundation’s fiscal year.

      The Foundation Treasurer shall make a report to the Board of Directors at each regular meeting on the status of Foundation investments as necessary.

    6. Exceptions

      Modifications and exceptions to this policy shall be authorized only by the Board of Directors or as provided herein. The terms and conditions of this policy may be waived if specified by the terms of any gifts received in the future and if approved by the Board of Directors.

  2. FUNDS
    1. Unrestricted Funds
      1. Description: An unrestricted fund used to cover Foundation operating expenses and make initial deposits of all funds raised.
      2. Risk Tolerance: Primary objective is to preserve and maintain principal value of the assets.
      3. Asset Allocation: Asset allocation determined by the Minnesota Community Foundation and/or 100% interest–bearing checking account
      4. Distribution: The Foundation Board has discretion of using both principal and interest for any purpose
    2. Endowment Funds
      1. Description: An Endowment Fund in which the principal is maintained in perpetuity and the investment earnings can be utilized at the discretion of the Foundation Board of Directors. The Minnesota State Colleges and Universities Foundation has selected the Minnesota Community Foundation to invest and manage its endowment and Board designated endowment funds. According to this agreement, investment income will be returned, net of fees, each March to the Minnesota Community Colleges and Universities Foundation for distribution.
      2. Risk Tolerance: Optimize, over the long run, the total rate of return on investable assets based on the chosen asset–allocation model.
      3. Asset Allocation: Asset allocation determined by the Minnesota Community Foundation.
      4. Distribution: Distribution rate of not less than 4.25%, the actual distribution rate to be determined by the Board of Directors.
    3. Restricted Funds
      1. Description: Occasional gifts are offered to the Foundation whereupon the donor wishes to place certain restrictions on the form of investment to which these amounts may be applied. Such funds will be invested according to the donor?s requirement only to the extent such requirement is a condition of the gift. As a normal course, donors will be encouraged to entrust endowed gifts to the institution without restriction of the investment of these funds, and the Foundation may, from time to time, determine that the refusal of such restrictions, and the gift, is more prudent than acquiescence.
      2. Risk Tolerance: Determined by the restrictions on investments of the donor.
      3. Asset Allocation: Determined by the restrictions on investments of the donor.
      4. Distribution Distribution rate of not less than 4.25%, the actual distribution rate to be determined by the Board of Directors. The Finance/Investment/Audit Committee will annually determine exact distribution. Non–endowment fund distribution will be determined by restrictions on investments of the donor.
  3. FEE STRUCTURE
    1. Unrestricted and Endowment Funds

      Fee Structure:
      The Minnesota State Colleges and Universities Foundation has the authority to assess limited fees to its non–endowed funds. In addition, all interest earned on these funds will be directed to the Unrestricted Fund of the Minnesota State Colleges and Universities Foundation.

    2. The Finance/Investment/Audit Committee will annually review its fee structure.
  4. ESTABLISHING NEW FUNDS
    1. Non Endowed Funds

      New Funds:
      Non–endowed funds can be established with the Minnesota State Colleges and Universities Foundation provided the purpose of the gift is in following with the mission and charter.

    2. Endowment Funds

      New Funds:
      Endowment funds can be established with the Minnesota State Colleges and Universities Foundation with a recommended gift or pledge of $10,000. Pledges should be completed within five years, or the gift will be considered a non–endowed fund that will be administered consistent with the original intent keeping the donor's name associated with the gift and purpose.

  5. ANNUAL REVIEW:
    1. This Policy is to be reviewed on an annual basis.

APPROVAL
Adopted: June 8, 2006