Addition and Withdrawal Policy
Rationale for the Adoption of a Policy
For generations, the Trustees of the Funds operated as a collective pool of primarily diocesan funds. The diocesan funds generated income to support various diocesan purposes such as world hunger or mountain missionary work.
Over time, and particularly in the last 20 years, the Trustees of the Funds has expanded in the number of funds managed and in assets under management. The growth of “parish funds” has been a key part of this growth. Serving the diocese has been a hallmark in the work of the Trustees of the Funds, dating back to 1754.
In 1991, there were a total of 189 funds (75 diocesan, 114 parish). In 2013, there are nearly 600 funds, meaning just over three times as many accounts to track. Growth in assets has moved from $11.6 million to approximately $102 million, over eight times the assets.
For the vast majority of parish funds, they remain smaller accounts, although higher in number of accounts. The Trustees recognize that is a growing issue related primarily to the diocesan funds and the potential for spikes in inflows but more importantly in outflows. The development in the complexity of the portfolio involves active, passive and non-exchange traded accounts (NETAs). The NETAs, in particular, involve contracts and may also lock-up periods. These issues impact the liquidity of the portfolio, but in using such funds, the Trustees are able to accomplish performance results in concert with mitigating risk and volatility. In essence, the management of inflows can be every bit as challenging as the management of outflows when it comes to the allocation strategies outlined in the Investment Policy Statement.
The long-term use of the Trustees of the Funds by related organizations, each investing several million dollars, has created a dramatic shift, in the absence of a policy limiting flows, in how assets must be considered for liquidity. While the use of the Trustees of the Funds by all Episcopal entities is welcomed, these several related organizations account for roughly $13 million of the $102 million in assets (about 12%) in their 40+ named funds. Withdrawal of significant portions of these major investors assets, as opposed to the typical church-based account, would present a portfolio management dilemma.
To accommodate not only a workable Investment Policy Statement but also provide professional portfolio management as stated for existing and potential participants, a model for a withdrawal schedule has been adopted. The policy incorporates prior language as developed in partnership with SunTrust Bank relative to fund account liquidation. This policy seeks to formalize what has been in practice for many years.
Trustees of the Funds - Withdrawal Policy
No single withdrawal from a fund (or a total withdrawal from multiple funds) from a participating church or church organization, shall exceed $1,000,000 in any one month.
The Trustees require 30-day notice on any single withdrawal (or total withdrawal from multiple funds) from a participating church or church organization of $500,000 or more, up to the one-month maximum of $1,000,000.
In the event that complete liquidation of a fund is requested, 90% of the currently reported month’s market value will be issued upon receipt of request, up to the $1,000,000 monthly limit. The remaining balance will be issued once the subsequent month’s market value has been established, again doing so up to the $1,000,000 limit.
The Trustees of the Funds reserve the right to accommodate specific requests exceeding the stated withdrawal policy. Such accommodations will be handled on a case by case basis.