by Karen Topakian
The current issue of the Chronicle of Philanthropy reports on which foundations have taken the biggest hit in their assets since the financial crisis hit. The Bill and Melinda Gates Foundation lost 20% of their assets – from $38 billion to $31. I can’t imagine how it must feel to lose seven billion dollars. I feel badly when I misplace a twenty-dollar bill. Despite this loss, they are increasing their grantmaking in 2009.
But the Gates Foundation didn’t even lose the largest percentage, according to the Chron of Phil. That title belongs to the Starr Foundation in New York, which has lost 57% of their assets since 2007. And yes they are decreasing their grantmaking budget for 2009.
You will be happy to know that the Agape Foundation didn’t lose a dime of our endowment in the stock market. How were we such smart investors? Easy, we never put a dime of into the market. Despite my request to the Board to form an Investment Committee. Despite their recommendation to the Board of Trustees to invest in equities. Despite the Board’s approval of a plan I helped draft, I never followed through.
Do I look smart now? Sure I do. Did I follow the wishes of the Board? Nope. I am merely the lucky survivor of procrastination. In August, when I should have authorized our financial manager to move the money from Calvert Community Investments with a fixed rate of return of 3% to socially responsible investing, I was too busy focused on making the Peace Prize event a success in September. And that’s when it all came tumbling down.
The good thing is, we didn’t lose any of our assets. The bad thing is, I disobeyed the Board’s direction. Will I get punished? Probably not. But if it had gone the other way and we lost money because we weren’t in a booming market, I would have a lot of explaining to do.
Not sure what the lesson is here. But I do know one thing, years ago when the board began raising money for the endowment, the Trustees decided not to invest in the market because two board members lived through the depression and remembered how so many people suffered. Their personal experiences coupled with the other Trustees’ healthy skepticism about capitalism created a risk-free plan for our donors’ hard earned contributions.
And it paid off.
So thank you, Shirley and Harold, for leading us towards conservativism, but only when it comes to investing.
I was on the Board when we created the endowment fund. I’ve donated a bit towards it. Karen, I’m glad you didn’t get around the getting the money into “screened investments.”
3% used to be thought of as a reasonable return on an investment. Then the stock market started posting huge returns, and folks said “you’re wasting your money if you don’t invest in the market.” But what is the stock market? It’s gambling. Who wins: Those who stay in it for a long time (generally). Who loses? Those who are at retirement age when the stock market crashes. Suddenly, their projected income is much less. But even those folks have much more money than those who’s only pension is social security.
Karen, I’m glad you didn’t get around to “investing” the endowment in the stock market. My advice to the Board is to not worry about making “the most” in interest (even if “the most” includes social screens). Keep up the good work of raising money and making grants. Don’t get caught up in trying to “keep up with the Jones’s” in interest rates.
Lee