The purpose of the investment policy is to state the policies, guidelines and objectives of the Mid Michigan College Foundation Investment Portfolio (The Fund). The mission of the Foundation is to provide financial assistance to students, support educational and cultural program development, encourage academic excellence and faculty enrichment, and assist with continued improvements of College facilities.
This policy is intended to provide a clear understanding of the objectives of The Fund, the responsibilities accepted by and authority granted to the Investment Manager(s), and to create an effective working relationship with the College's Investment Manager(s), the Investment Advisory Committee, and the Mid Michigan College Foundation Board of Directors. This policy establishes a philosophy that guides The Fund toward the desired performance; that it be specific enough to be meaningful, yet flexible enough to be practical.
The Mid Michigan College Foundation Board retains overall authority for approval of investment policy and control over The Fund's management assets.
The Investment Advisory Committee is established and appointed by the Foundation Board and makes recommendations to the Foundation Board. Specific functions of this committee are:
The Committee will consist of members of the community, College representatives and Foundation representatives. The total size may range from five (5) to ten (10) members. The Foundation Board Treasurer and the College’s Vice President of Finance and Facilities will be permanent members of the Committee.
The investment objective of The Fund is Growth and Income. The purpose of this objective is to generate adequate income to support the activities and programs of the Foundation and provide for the growth of The Fund to keep pace with rising costs and the future needs of the Foundation. The investment portfolio shall have sufficient liquidity to meet anticipated operating requirements and sufficient diversification within its investments to mitigate risk. This objective is subject to annual review and may change as The Fund grows.
The overall asset mix of The Fund, measured by market value, shall be as follows:
| Asset Type | Minimum | Maximum | Target |
|---|---|---|---|
| Equities | 40% | 70% | 60% |
| Fixed Income | 30% | 60% | 40% |
No separate cash shall be maintained. Cash balances maintained as part of the normal course of business may be invested in a money market fund. The Advisor(s) or Manager(s) shall rebalance The Fund to within the prescribed asset allocation range whenever necessary.
The account’s performance will be compared to a blended benchmark of the appropriate components below:
| Asset Class | Benchmark |
|---|---|
| Cash | Lipper U.S. Government Money Market |
| Fixed Income | Bloomberg US Government Credit-Intermediate Index |
| Domestic Equities | Dow Jones Total Stock Market Index |
| International Equities | MSCI ACWI ex USA Index |
The portfolio performance, net of fees, for each individual investment manager shall compare favorably with the market index which best reflects the capitalization, style and other characteristics of the manager.
On a relative basis, the total portfolio, net of fees, shall be compared to a composite of the individual market indices weighted in the same proportion as the average portfolio allocation of the managers.
The standard deviation (risk) of the total portfolio should approximate the standard deviation of the composite index.
The Distribution Policy reflects the fundamental objective of supporting the Mid Foundation’s activities while preserving and enhancing its financial resources. Foundation funds can be used to serve the College in many meaningful ways for which public funds may not be available. Within this framework, reasonableness and fiduciary responsibility must guide the use of funds.
There are three primary kinds of funds within the Foundation:
Restricted Endowed Funds:
Restricted endowed funds are placed by donors in endowments in which the principal is preserved in perpetuity. The income generated by each fund is made available as outlined in the donor’s restrictions. The Foundation reserves the right to take a fee based on actual expenses or a percentage of the market value of each restricted endowed fund. This fee is used to pay expenses associated with the processing and administration of the fund.
Restricted Expendable Funds:
These funds (sometimes referred to as pass-through funds) are made available for specific purposes as specified by the donor. Each fund can be fully expended in support of the program named by each fund. The Foundation reserves the right to charge a fee for the processing and administration of restricted expendable funds and to cover the costs of associated fundraising efforts.
Because the Foundation Board has little control over restricted funds, such funds are not included in the annual distribution calculation.
Unrestricted Expendable Funds:
Unrestricted expendable Foundation funds, and any investment income generated from those funds, can be used for the general benefit of the College, its specific programs, and its students. Any benefit that might accrue to a donor, faculty or staff member must be incidental. A portion of these funds may also be used for administration, staffing, and costs associated with the Foundation, its programs, and events.
Annual Foundation distributions from unrestricted expendable funds should total no more than 5% of a five-year rolling average of the market value of the unrestricted investment portfolio (calculated using the prior five June 30th year-end financial reports). The Investment Advisory Committee will meet in March to make a recommendation for the actual amount to be expended, based on this policy and the Foundation’s expected disbursements. This recommendation will be acted on by the Foundation Board at its next meeting.
On a quarterly basis, the Investment Manager(s) shall present to the Investment Advisory Committee a written report on The Fund's status and investment performance relative to the goals and objectives set by this policy. The report shall also include a review of market trends and outlook, an update on investment strategy and recommendations for asset allocation or individual manager changes as appropriate.
The Investment Advisor(s) shall report promptly any significant changes in their firm or the investment management ownership, management, professional personnel or organizational structure that might result in a conflict of interest, change in investment philosophy, or otherwise alter the management of The Fund's assets.
The Investment Manager(s) shall promptly report any downgrades in the rating of investments held by The Fund and make recommendations as appropriate.
The Mid Michigan College Vice President of Finance and Facilities and the Foundation Board Treasurer shall report the results of the quarterly performance review to the Foundation Board.
When appropriate or necessary, the Committee will communicate with the Mid Michigan College Board of Trustees through the Board of Trustees representative on the Foundation Board.
As deemed appropriate by the College’s Business Office, assets donated to the College shall be transferred to The Fund by the 25th of each month for investment purposes effective the first of the following month.
To the extent possible, all funds will be used for the intended purpose of the event or donation.
The Investment Advisory Committee shall review this Investment and Distribution Policy at least annually and make recommendations for changes, as appropriate, to the Foundation Board.
Original: December 10, 2002
Updated: September 8, 2005
Updated: November 9, 2006
Updated: July 12, 2007
Updated: July 10, 2008
Updated: March 11, 2010
Updated: January 10, 2013
Updated: June 6, 2019 (approved by Foundation Board on August 8, 2019)
Updated: September 10, 2021 (approved by Foundation Board on November 9, 2021)
Reviewed: May 11, 2023