Financials & Chief Financial Officer’s Message
Mary Jane Rynd
Executive Vice President and CFO
Management of Piper Trust’s investments has evolved and become more strategic over time. This organic yet intentional maturation is especially noteworthy given that recently the Trust achieved a grantmaking milestone, surpassing the $300 million mark in awards to nonprofits and programs—while ending the past fiscal year with its corpus valued at almost $514 million. As such, we’re proud to share some history about the progression of our investment committee structure, asset allocation, and manager diversity.
Early in the life of the Trust, the board acted also as its investment committee. In 2005, the board grew and appointed four Trustees to serve as an investment committee which has since expanded and now includes external committee members and an additional board member.
As the investment committee structure evolved so did the Trust’s investments. Between the months of May and July of 2000 the Trust was endowed with $589 million dollars when Virginia Piper’s estate settled. For almost a year the Trustees had worked diligently with professional advisors. They pored over information about investment consulting firms, interviewed finalists, and selected Stratford Advisory Group. Stratford consultants helped the Trustees determine the initial allocation of assets, presented asset managers to consider, and performed due diligence.
By the end of November 2000, the Trustees significantly reduced Motorola stock holdings (which represented the entire endowment) to ensure diversification. They allocated funds to six active managers and an S&P 500 index fund invested in U.S. equities; two firms actively managed international equity, and two others actively managed fixed income. Assets were allocated among traditional assets classes; 60 percent equity and 40 percent fixed income.
In early 2005, 25 percent of the fixed income allocation (10 percent of the endowment) was allocated to two hedge fund of funds managers. The investment committee became interested in increasing the alternative asset allocation in mid-2006 and following a thoughtful RFP process, the board appointed Cambridge Associates as its investment consultant. Cambridge staff led the effort to further diversify the endowment; create a portfolio of direct hedge fund investments; and also allocate funds to real assets, venture capital, and private equity.
Today, the endowment is highly diversified among asset classes and managers with almost 100 separate accounts. While the investment process evolves, the committee and the board remain committed to achieving long-term returns—essentially building the internal muscle that supports the Trust’s programs and grantmaking by taking appropriate levels of risk and linking arms with quality, proven firms.
This evolution from 11 accounts to nearly 100 is rewarding on many levels. Returns have exceeded benchmarks, returning 7.5 percent in this fiscal year (with an average of 7.3 percent over the past three years). Despite the economic downturn and a depressed market in 2008, the Trust has been able to meaningfully support the community—through effective grantmaking and beyond. We see the progression of our investment management in the spirit of Virginia’s own words: “Managing the stewardship of charitable giving is a moment-to-moment dignified responsibility.”
Results for the last three fiscal years are summarized on the following table. Each year operating expenses and grants were in line with the board-approved budget. The information in the table is on a GAAP, accrual basis. On a cash basis grant and direct charitable activity payments exceeded $60.9 million over the past three fiscal years.
|Investment Activity, Net||$36,879,212||($815,726)||$62,400,790|
|Grant Awards and Direct Charitable Activities||($16,458,093)||($26,762,446)||($10,815,242)|
|Grantmaking and Administrative Expenses||($4,233,803)||($3,793,748)||($3,679,940)|
|Federal Excise Tax Benefit (Expense)
on Net Investment Income
|Beginning Net Assets||$479,425,248||$510,887,362||$464,407,098|
|Ending Net Assets||$495,112,886||$479,475,248||$510,887,362|
During this fiscal year, implementation of long-term asset allocation targets continued and the allocations are within the ranges set by the board.
Fair Market Value of Investments and Charitable Expenditures
The blue bars illustrate the fair market value of Piper Trust’s investments and the white circles show the level of charitable expenditures each fiscal year.