Episcopal Treasurer discusses Church endowment
The Governance of the Episcopal Church: This information is another in an ongoing series discussing the governance of The Episcopal Church.
“The Episcopal Church Endowment produces 15.5% return in 2010 and far exceeds median foundation return of 13.3%.”
So states Kurt Barnes, Treasurer and Chief Financial Officer of the Episcopal Church, who has provided an overview of the endowment and the five year performance.
Barnes’ detailed information follows:
When the Episcopal Church Executive Council declared a dividend payout mid-February of $1.09 in 2011 on the endowment of the Episcopal Church, most people thought of it as just another bit of financial housekeeping. But for the 100 or so parishes, dioceses and other Episcopal entities that co-invest with the church’s endowment, it was the continuation of a successful and professionally managed investment program.
The investment assets of The Domestic and Foreign Missionary Society of The Protestant Episcopal Church in the United States of America (known as DFMS) include both long-term assets such as endowment portfolio and charitable trusts, and short-term assets, such as DFMS operating cash and custodial accounts held for others. At December 31, 2010, the biggest portion was the endowment funds (trust funds) included in three categories:
- $227.7 million of funds owned, held and managed by DFMS and benefiting DFMS (Endowment)
- $39.0 million of funds owned, held and managed by DFMS and benefiting other Episcopal/Anglican entities (trustee type)
- $39.9 million of funds held and managed by DFMS but owned by and benefiting other Episcopal/Anglican entities (custodial type which included 48 dioceses, schools and parishes).
The Episcopal Church’s endowment performance compares very favorably against various benchmarks. During 2010, the Episcopal Church’s 15.0% return significantly exceeded the 13.8% return of similar sized foundations and endowments tracked by the Bank of New York Mellon, a major custodian and performance measurement service. In the five years ending December 31, 2010, the Episcopal Church earned 5.1% on an annualized basis – and that’s after paying out annual dividends of approximately 5.5%. By comparison, that return surpassed the 3.8% return for the policy benchmark established by the Executive Council Investment Committee and the 4.4% median return recorded among foundations.
The chair of the Investment Committee, Joel Motley, noted that “performance on an absolute, relative and risk-adjusted measure has indeed been very good” and emphasized that “expanding contributions to the endowment could benefit the mission of individual parishes and the broader church.”
Dennis Sullivan, the vice-chair of the Investment Committee, explained that “the assets of the endowment are broadly diversified and actively managed by a group of professional managers.” Sullivan, who is the president of the Church Pension Fund, which invests assets for the defined benefit retirement plan for Episcopal Church clergy, noted that “managers are also given guidelines to ensure that their portfolios follow principles of socially responsible investing established by the General Convention.”
David Hyman of Evaluation Associates, the Episcopal Church’s investment advisor, noted that “the Investment Committee held true to its long-term investment philosophy and did not react to short-term trends in the marketplace following 2008. Additionally, the Investment Committee continually discusses the appropriate asset allocation understanding that maintaining a long-term strategic framework may need to be revised as conditions in the marketplace warrant.”
When asked how others might participate, I explain that any Episcopal parish, diocese or other Episcopal-affiliated organization is welcome to place funds in custody in the DFMS Endowment Portfolio. All funds are invested and participate on a pro-rata basis in all returns and share proportionately in the investment management fees and expenses. My colleague, Margareth Crosnier de Bellaistre, Director of Investment Management and Banking, adds, “There are no additional charges for portfolio administration, which for many small investors can range to nearly 2% annually”.
The investment strategy and performance of the Episcopal Church’s endowment is not broadly known. It doesn’t advertise and participation is not mandated by General Convention. It is one of the services that we humbly offer to the church from the Episcopal Church Center.
Treasurer and Chief Financial Officer
The Episcopal Church
Episcopal Church Finance Office: http://www.episcopalchurch.org/finance.htm
The Episcopal Church welcomes all who worship Jesus Christ in 109 dioceses and three regional areas in 16 nations. The Episcopal Church is a member province of the worldwide Anglican Communion.