Policy Documents
< All Topics

Donor Recommended Investment Manager Policy

Guidelines for Donor Recommended Investment Manager

I. Introduction

The Foundation recognizes that certain large donors may desire to recommend the use
of a specific manager or broker to manage their contributed funds. This practice may
also help in gaining the cooperation of the brokerage community in directing their clients
toward creating a fund with the Foundation.

II. Policy

Upon request by a donor at the time of a gift and establishment of a fund, and subject to the approval of the Foundation’s Investment Committee, the Foundation may enter into a contract with an individual investment manager or management firm (“Recommended Manager”) to manage assets given to the Foundation.
Requests for donor recommended managers are subject to the following conditions:

  • The contributed funds must exceed $200,000. Funds that fall below this amount for a period greater than one year may be consolidated into one of the Foundation’s existing pooled accounts.
  • The donor requests in writing, that the gifted assets be held by the Recommended Manager.
  • The Recommended Manager, at a minimum, must be a registered investment advisor under the Investment Advisors Act of 1940 and comply with any State requirements.
  • The assets must be managed in a separate account belonging to the Foundation and the donor may exercise no control over that account.
  • Fees charged by Recommended Investment Managers must be equal to or below the median expense level of its appropriate peer group, not to exceed 1%.
  • The donor will not personally benefit from the Foundation’s relationship with the Recommended Manager. The donor does not have a family relationship with the Recommended Manager or with the employees or owners of the Recommended Manager’s firm.
  • The Pension Protection Act of 2006 amended section 4943 of the Internal Revenue Code to limit ownership of closely held business interests in a donor advised fund. A fund’s holdings, together with the holdings of disqualified persons (donor, advisor, members of their families and businesses they control) may not exceed any of the following:
    • 20% of the voting stock of an incorporated business;
    • 20% of the profits interest of a partnership, joint venture, or the beneficial interest in a trust or similar entity;
    • Any interest in a sole proprietorship.

These limitations do not apply if the donor-advised fund holds an interest that does not exceed two percent of the voting stock and two percent of the value of the business.

III. Fees:

The donor acknowledges that the fees and expenses charged by the Recommended Manager will be deducted solely from the total return on the funds. The Foundation will discuss these fees and expenses with the Recommended Manager to reach an agreement establishing fees and expenses that are reasonable and commensurate with the services the Recommended Manager will provide.

The donor agrees that an Investment Consultant’s fee will be deducted from the total return on the funds.
The donor agrees that an annual administrative fee will be deducted from the total return on the funds.

IV. Investment Management

The donor acknowledges and the Recommended Manager agrees that the Recommended Manager will communicate regularly with the Foundation and/or its consultant, will provide monthly investment performance reports to the Foundation, and inquiry only access to account data, where possible, to the Foundation’s investment consultant.

The Recommended Manager will play a primary role in applying due diligence standards to the managers held in their respective accounts, including monitoring.

Recommended Managers are required to adhere to the Investment Guidelines set forth in this Investment Policy Statement, including but not limited to, approved asset classes and investment restrictions. The Recommended Managers of funds in the Endowment Fund have the option of being part of the overall Endowment Fund or managing a fund on a standalone basis. If a fund is managed on a standalone basis, the Recommended Manager is required to mirror the approved asset allocation prescribed in Section IV as closely as possible, and at a minimum, must adhere to the overall stock/ bond allocation. The portfolio should be a diversified allocation of stocks and bonds consisting of a minimum of two stock asset classes and two bond asset classes.

Any funds managed on a standalone basis by a Recommended Manager will increase or decrease as a result of its standalone investment performance. For Recommended Managers managing funds folded into the Endowment Fund, investment earnings on the Endowment Fund will be allocated to the fund established by the donor in the same manner that said earnings are allocated to all of the Foundation’s other endowed funds.

V. Revocation or Termination

The donor and the Recommended Manager acknowledge that the Board of Trustees of the Foundation may, at any time, revoke the privilege of the donor recommendation and terminate any contract or agreement with a Recommended Manager. The donor acknowledges that I.R.S. regulations require that the Foundation Board retain the sole discretion to terminate the Foundation’s relationship with the Recommended Manager, and to transfer the funds held by the Recommended Manager to other investment managers under any facts or circumstances that the Board in good faith believes warrant such termination and transfer. Such facts and circumstances will include but not be limited to a determination made in the sole discretion of the Board that the Recommended Manager has failed to meet benchmark requirements; has failed to perform comparably to other managers; has charged fees that are incommensurate with services provided; or has otherwise failed to perform as requested by the Foundation.

In the case of an agency donor, the board of the agency must pass a resolution directing the agency to request that the Foundation enter a contract with a specifically named manager. The agency donor must supply that resolution to the Foundation at the time of making its request.

Each instance of the requests contemplated by this Investment Policy will be evaluated individually. As always, the Board reserves the right to refuse any gift deemed to be against the best interests of the Foundation.

Approved by Board of Directors 11-24-20