Board of Trustees
Introduction
July 17, 2015
Agenda
BOT Overview
• Purpose and authority
• Interactions within SWE
• Interactions outside SWE
Endowment Fund
• Purposes
• History
• Financials
Reserve Fund
• Purposes
• History
• Financials
Governance Proposal
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Two key purposes
• Manage the assets of SWE-EFI
– Authority: SWE-EFI Bylaws and Articles of Incorporation
• Manage the assets of SWE Reserve Fund
– Authority: SWE-RF Document
FY16 Trustees
Marge Inden
FY15-FY17
Chair
Diana Joch
FY14-FY16
Treasurer
Ester Barbuto
FY14-FY16
Secretary
Angela Nickels
FY16-FY18
Carolyn Phillips
FY15-FY17
Sandra Postel
FY16-FY18
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Interactions within SWE
With the BOD
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BOD is “sole member” of SWE-EFI
Annual meeting required
With SWE-HQ
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Scholarship interactions
Financial
With the Senate
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Reserve Fund, and as requested
With the Membership
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Members elect Trustees on SWE’s ballot
Annual report presented yearly
With the Scholarship Coordinator
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Close working relationship
With the Regions/Sections/MALs
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Scholarship and Designated Fund interactions
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Interactions outside SWE
Investment managers
• SWE-EFI: Commonfund
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Excellent risk-return profile
Provides prudent access to alternative asset classes
Nonprofit with a mission to help nonprofits with investing
Prestigious client list
Moderate cost
• SWE-RF: Vanguard
– Experienced, proven firm with large client base
– Expert guidance on portfolio construction
– Low cost
Bookkeeper & Accounting
• Foster Results, hired for FY15
• Porte Brown (or other firm as selected by SWE), auditor
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SWE Endowment Fund, Inc. (SWE-EFI)
Endowment
Definition: long-term assets held to generate a permanent
stream of income
• Principal is not spent
• Spending can come from interest, dividends, and capital gains
• Funds may be restricted (by the donor only)
Examples of endowments
• College and university endowments
• Private endowments (e.g. Ford Foundation)
• Charitable endowments
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SWE-EFI Components
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Headquarters Account
Scholarship Account
Awards Account
Designated Fund Account
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Endowment Investment Policy Statement (IPS)
Guides the long-term operation of the endowment
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Balance between risk & return
Asset Allocation (targets and bands)
Permitted/prohibited asset classes
Targets for total return
Metrics and benchmarks
Spending policy
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Spending Policy
SWE-EFI currently pays 4% of the opening balance
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Across all four accounts
$25,000 gift provides a $1,000 income stream (one year later)
Intent is to grow income over time (not guaranteed)
Income can drop if markets perform poorly
Spending policy is reassessed yearly
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Headquarters Account
• Established in 1956 as the Headquarters Fund
• Original purpose: to provide support for a HQ
• Life member donations go to this account
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20 years dues (currently $2,000) is the cost of a life membership
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Inconsistent with the 25:1 ratio for other programs
• Bequests are occasionally received
• Unrestricted income to SWE
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Scholarship Account
• Established in 1956 to award the Gilbreth Scholarship
(only)
• Now awards over 91 scholarships with a value of
$221,250 (FY16)
• Section/Region/MAL Endowed Scholarship program
established in FY03
• Includes scholarships from:
• Living donors
• Bequests
• Sections/Regions/MALs (can be locally selected)
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Endowed Scholarship Program
• Open to all: SWE entities, individuals, estates, etc. Only
SWE entities may select locally
• $25,000 gift to award a $1,000 scholarship in perpetuity
• One year’s time between gift and first income
• Increases are at BOT discretion
• Funds are pooled for investment
• Gifts are irrevocable
• Once endowed, any amount can be added
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Awards Account
• The annual awards subsidy covers:
• The Rodney D. Chipp Fund (1972)
• The Resnik Challenger Medal Fund (1988)
• The Motorola Foundation Multicultural Fund (1996) – minimum
$1500
• The Boeing Multicultural Fund (2006) – minimum $1000
• The Northrop Grumman Suzanne Jenniches Upward Mobility
Award (2012) – approximately $4500
• Other awards at SWE’s discretion
• SWE reports annually to the BOT on use of these funds
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Designated Fund Account
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Open to SWE entities (Sections/Regions/MALs)
Creates a permanent stream of income to the entity
Minimum gift of $25K with a 10% “kicker” to HQ Fund
One year’s time between receipt of gift and first income
Income to be distributed by HQ in a process similar to
dues rebate process
• Entity is expected to have a long-term plan for the funds,
but the BOT is not policing how funds are spent
• To participate, the entity must complete a contract
• 4 contracts complete in FY15 (Regions D,G,H, MALs)
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SWE-EFI Fund Balances
*Pre-SWE-EFI
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Scholarship Stipends
*Pre-SWE-EFI
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SWE Reserve Fund (SWE-RF)
SWE-RF History
• Established in 1982 by the Council of Section Reps as
the Contingency Reserve Fund
• Principal purpose: to ensure long-term financial stability
• Controlled by the Senate and includes:
• Emergency Reserve
• Special Projects Reserve
• Income: 5% of conference overage
• Was higher prior to FY08
• “Base Level” of 75% General Operating Expense
• If RF exceeds Base Level, Special Projects funds are
available
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Reserve Fund Status
• BOT manages assets at the pleasure of the Senate
• BOT maintains a separate Investment Policy Statement
• Currently less equity exposure than SWE-EFI
• Anticipated increased withdrawals during FY16
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Reserve Fund Balance vs. SWE Operating
Expense
The Reserve
Fund
RATIO
91%
*$625 loan outstanding
78%
89%
77%
70%
82%*
92%*
84%*
103%
109%
SWE BOT Governance Proposal
History
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History
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History
Changes since 1956
• $300  Nearly $15 Million
• 1 scholarship  91 scholarships
• Awards Funds
• Headquarters Fund
• Reserve Fund
• Designated Fund
• Professional Investment Management
• Regulatory environment
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Roles
The BOT has been operating with 5 formally defined roles:
• Chair (elected)
• Treasurer (elected)
• Secretary (elected)
• Investment Manager Liaison
• Scholarship Liaison
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Roles
Additional roles have been necessary at times:
•Treasurer “elect”
•Chair “elect”
•Designated Fund Coordinator
We have no staff, only a contract record keeper
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Proposal
Proposed: to increase the BOT size from 6 members to 8
members
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Elect a 7th member in 2016 election, to serve FY17FY19
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Elect an 8th member in 2017 election, to serve FY18FY20
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No change in 3-year term
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No change in officer election
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Process
Amending the SWE-EFI bylaws requires:
•Senate approval
•BOT approval
•BOD approval (as the “sole member” of SWE-EFI)
No changes are required to:
•SWE Bylaws
•Reserve Fund Document
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Reference and contact
Reference Documents
Documents available on SWE Resources:
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Reserve Fund Document
SWE-EFI Articles of Incorporation & Bylaws
SWE-EFI Transfer Document
SWE BOT Policies
– Conflict of Interest
– Whistleblower
– Gift Acceptance (joint w/SWE)
• Designated Fund FAQ and Contract
• FAQ on Endowed Scholarships
• Audits
Documents on Donate:
• Scholarship Endowment Pledge and Criteria Forms
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Contact Info
Chair, Marge Inden
• [email protected]
Treasurer, Designated Fund Liaison
Diana Joch
• [email protected]
Scholarship Liaison, Sandy Postel
• [email protected]
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Questions?