As a public charitable foundation, the Western Colorado Community Foundation adheres to the highest standards for financial accountability and transparency. WCCF’s board of directors elects a Treasurer and four-person Finance Committee who work closely with our Director of Finance and Administration to prepare and review quarterly financial statements.
The annual 990 tax return is prepared each year by Dalby Wendland and Company. (Click to see our current WCCF 990). The board also appoints an Audit Committee to oversee an independent audit of financial statements each year and to review internal controls. (For a copy of our latest audit, CLICK HERE).
The Western Colorado Community Foundation manages $73 million in total assets. Our primary holdings are long-term investments (see below). WCCF also manages several revenue- generating assets including mineral rights and real estate holdings.
Our Community Foundation’s annual operating budget is approximately $690,000 – less than 1% of its total assets. Operations are covered primarily through an administrative fee that is charged on all invested funds. In addition to fees, between 20% and 25% of the operating budget each year is covered through income from our own operating endowment, individual donations and grants for special projects.
The long-term stewardship of donations entrusted to WCCF by our many donors is one of our organization’s most important responsibilities. Our investment program pools the assets of all our permanent charitable funds for investment purposes. Each individual fund benefits from the strength of a large, well-diversified portfolio. This results in professional, high-quality investment management at reasonable fees and costs.
WCCF has a seven-person Investment Committee comprised of board members and community leaders with investment expertise that develops the investment and spending policies and establishes the target strategic asset allocation, performance goals and benchmarks. The Investment Committee hires and monitors an investment consultant, Mason Investment Advisors. Mason has a strong performance track record and special expertise in working with community foundation clients.
The long-term investment portfolio is well-diversified and includes 16 different asset classes and is regularly re-balanced to stay in compliance with the strategic asset allocation. Our portfolio is invested approximately 78% in growth vehicles and 22% in income vehicles.
Currently our investment policy prohibits more risky alternative investments. The portfolio includes both actively managed and passive funds. The target annualized 10-year return is 6-8% net of investment management and internal fund fees. This return rate allows us to fulfill our goal of paying out 4.5% each year, covering our administrative fee, and reinvesting 2% to 3% each year so that the fund balance grows to keep pace with inflation.
Our assets are invested in a long-term grown portfolio with the following composite returns. These are net of all investment fees.
Annualized returns (performance as of 12/31/17)
5-year annualized: 9.3%
10-year annualized: 6.0%
15-year annualized: 8.4%
Please note that WCCF has been in this portfolio since November 2013. Past performance is no guarantee of future performance.
In addition to its long-term invested assets, the Western Colorado Community Foundation holds cash reserves and shorter duration project funds and funds for pay-out of grants and scholarships. Millions of dollars with liquidity requirements are held in local banks and financial institutions in western Colorado.
Spending Policy for Annual Distribution from Funds
The value of an endowed fund is that it will continue in perpetuity and funds will be available every year for grants and scholarships. WCCF’s spending policy is established by the board of directors and is currently 4.5% of the fund balance calculated against a rolling average of the past 20 quarters (5 years). This “smoothing technique” allows us to maintain a relatively consistent pay-out or distribution amount each year regardless of current year investment performance or volatility in the markets. Our board believes this spending rate is sustainable over the long-term.
Donors who prefer a different annual distribution rate may request so at the time of their donation and when they complete the fund agreement paperwork. Donors who establish non-endowed (e.g., spend down) funds are not subject to this spending policy.
WCCF assesses an annual administrative fee of 1% on the fund balance of each of its permanent funds to cover its own operating expenses. This is a standard fee in the community foundation field. The administrative fee for a scholarship fund varies between 1% and 2% depending on the complexity of scholarship program administration for that fund. Non-endowed funds are charged a one-time processing fee at the time of the donation.
Real estate and other non-liquid assets are assessed a 2% fee. Large and complex estate gifts are assessed fees appropriate to cover legal, accounting and other expenses associated with settling these gifts.