2004年地域扶輪基金 協調人研習會訓練材料

    2004 RRFCs' Training Materials

Permanent Fund Financial Report

Rotary Year 2002-2003

1) What is the purpose of the Permanent Fund?

The Permanent Fund was established in 1982 to ensure a strong future for the Foundation by providing an extra stream of income to meet the increasing demand for the Foundation’s programs and to expand its ability to meet urgent human needs around the world. Donors invest perpetuity in this endowed fund which builds long-term stability for the Foundation’s future.

Rotary International’s Board of Directors and the Trustees of The Rotary Foundation have identified the following programs as priorities for program spending:

PolioPlus

Rotary Ambassadorial Scholarships

The Rotary Centers for International Studies in Peace and Conflict Resolution

Group Study Exchange (GSE)

Matching Grants for International Humanitarian Projects

Individual Grants for International Humanitarian Programs

District Simplified Grants for International Humanitarian Programs

Health, Hunger and Humanity (3-H) Grants

2) How much is spent on programs each year from the Permanent Fund?

Each year the Trustees review the spending policy to ensure that the real value of the Permanent Fund grows over time and that the annual spending rate does not exceed the expected long-term rate of return less the expected rate of inflation. In years where the inflation-adjusted investment return is greater than the spending rate, the “surplus” will be reinvested to cover those periods when the inflation-adjusted investment return is less than the spending rate. During the fiscal year 2002-2003, the policy called for spending 6.5% of the three-year average of the Fund’s quarterly market values, with 100% of these funds being allocated to programs. Under this policy, investment fees are deducted from the fund’s investment income and any administrative cost is borne by the Annual Programs Fund. This policy, coupled with strong investment returns during the late 1990’s, dramatically increased the funds available for program spending.

The table below details the dollar amounts made available from the Permanent Fund in support of annual programs of the Foundation.

The chart below breaks down the allocation of $6,636,296 in Permanent Fund earnings for 2002- 2003.*

 *The Trustees and Rotary districts make decisions on specific program support for the spending portion directed to SHARE and World Fund after being invested for up to three years through the SHARE system. The Rotary Foundation’s 2002-2003 Annual Report provides more detailed information on overall program support. 

3) Management of Investments 

The Trustees of The Rotary Foundation are responsible for the general direction and control of the Foundation’s investments and have established a specific investment policy for each fund. 

Experienced, professional external investment managers are appointed to invest Foundation assets in accordance with their judgment concerning relative investment values and in compliance with the Trustees’ investment policies. 

The Foundation’s Trustees, staff, and investment consultant closely monitor the performance of the investment managers and their compliance with policy guidelines. Quarterly investment reports are sent to the Trustees and key investment issues or concerns are discussed in depth at their October and April meetings. 

4) Investment Structure 

The Permanent Fund is invested in four asset classes. Below is a chart that shows the managers and composition for each of the investment pools. The target asset allocation of the fund is 60% U.S. stocks, 20% Non-U.S. stocks, 15% bonds, and 5% real estate. 

*The Permanent Fund has committed $3.25 million to private equity investments through INVESCO Private Capital and Coller International Partners. As of 30 June 2003, $650,000 has been invested. 

5) What is the investment objective for the Permanent Fund and how is the performance monitored? 

The Rotary Foundation invests Permanent Fund assets in such a manner to ensure that the organization provides adequate funding for today’s programs while sufficiently growing the portfolio to support the Foundation’s programs in the future. The primary goal is to preserve and grow the corpus at a rate greater than inflation so that the real purchasing power of the fund is maintained. 

Over a reasonable time period the funds are expected to achieve a rate of return in excess of the Policy Benchmark (see below) and the average return of similarly managed endowments. 

6) What has been the investment return for the Permanent Fund? 

The investment returns for the Permanent Fund are total returns net of fees. The Policy Benchmark consists of indexes, such as the Wilshire 5000 for U.S. stocks, the Lehmen Brothers Aggregate Bond index for fixed income securities and the Morgan Stanley All Country World ex-U.S. Index for the non-U.S. stocks. The benchmark is weighted to reflect the target asset allocation of the Permanent Fund during each fiscal year, and it represents the actual performance of the asset classes. The chart below shows the recent and long-term performance of the Fund. All periods greater than one year have been annualized. 

Through 30 June 2003 

7) What has been the growth of the Permanent Fund? 

As of 30 June 2003, the net assets of the Permanent Fund, including life income agreements, were $112.6 million. This represents a significant increase from the $87.2 million at the beginning of the Rotary year 1998-1999. In addition, the Foundation tracks expectancies to the Permanent Fund. Expectancies represent commitments made for future gifts, but they are not currently assets of The Rotary Foundation and are not included in the financial statements.

These commitments are typically made by including a provision in a person’s will, or other estate plan, naming the Foundation’s Permanent Fund as a beneficiary. The Permanent Fund’s net assets plus expectancies equaled $356 million as of 30 June 2003.

8) How can I contribute to the Permanent Fund? 

The Permanent Fund provides Rotarians and other friends of the Foundation a way to create their own lasting legacy with Rotary. Contributions to the Permanent Fund tend to be larger than contributions to the Foundation’s Annual Programs Fund and are often initiated through a bequest. For special endowing opportunities for gifts of US$25,000 or more, please refer to the Foundation’s Named Funds brochure or contact Foundation staff directly. 

¹ Total spending does not match earnings available on page two due to unused Designated Funds and some endowed scholarships not yet being fully funded.

² Total spending included program spending, administrative, and investment costs. 

9) Contributing to the Permanent Fund through a Life Income Gift.

An increasingly popular way of giving to the Permanent Fund is through life income gifts. These gifts provide an income stream during the lifetime of the income beneficiary. After the death of the last income beneficiary, the remaining assets are placed in the Permanent Fund. Because of the unique nature of life income gifts, they are managed outside of the Permanent Fund. Life income gift assets are not included in the spending calculations for the Permanent Fund. However, they are included in the net assts of the Permanent Fund in the table above. The Foundation manages life income gifts worth US$13.8 million (as of 30 June 2003). Because they have different rules and goals, each type of life income gift has a separate investment structure. Life income agreements may offer donors the following benefits: an annual income stream; an immediate US federal income tax deduction; avoidance or reduction of capital gains taxes on gifts of appreciated assets; and possible estate tax savings. The main types of life income gifts are: 

l         Charitable Remainder Trusts: A charitable remainder trust is an irrevocable transfer of assets to a trust in exchange for payments to the donor or other beneficiaries. Trust payments can be fixed or provide a variable payout. Rotary’s trusts typically maintain a fairly high equity allocation to generate long-term growth greater than the rate of inflation.

l         Charitable gift annuity: In exchange for an irrevocable gift off cash or securities to establish a charitable gift annuity, The Rotary Foundation agrees to pay one or two annuitants a fixed sum each year for life. The number of annuitants and their ages determine the annuity rate. The payments are backed by the unrestricted assets of The Rotary Foundation.

l         Pooled Income Fund: An irrevocable donation of cash or securities to the pooled income fund is invested together with the gifts of all other pooled income fund donors. Quarterly income payments are made on a proportional share of the Fund’s income; the amount of the payments varies with the fund’s earnings and performance. The fund is invested in a mix of stocks and bonds to balance the need for current income with long-term growth of principal. 

10) How is my commitment or gift to the Permanent Fund recognized? 

Anyone who informs the Foundation in writing that he or she has made a provision in their will or estate plan naming The Rotary Foundation’s Permanent Fund as a beneficiary, or anyone who makes an outright gift of US$1,000 or more to the Permanent Fund is recognized as a Benefactor. Bequest Society recognition is extended for bequest commitments worth at least US$10,000. Major donor recognition is presented for outright contributions and life income gifts of US$10,000 or more. In appreciation for outright gifts of US$25,000 or more, the Foundation will honor the donor’s contribution by establishing a special Named Fund within the Permanent Fund. 

11) How Do I Obtain Additional Information? 

Visit Rotary’s website at www.rotary.org. If you are interested in learning more about life income agreements or endowment opportunities within the Permanent Fund, please contact Eric Schmelling, Director of Planned and Major Gifts, your zone’s Major Gift Officer, or your local Rotary International office.