Frequently Asked Questions

What does the foundation do with its contributions?

What is the foundation's investment objective?

How are investment returns measured?

What is the role of the Investment Committee?

Why is the foundation invested in different asset classes?

How is the target asset allocation set?

What is the role of Cambridge Associates?

How are investment managers selected?

How are managers’ investment performance monitored?

Does the Investment Committee ever change fund managers?

Why does the foundation have a charitable disbursement rate rather than distributing whatever is earned in a given year?

How is the 20-quarter (five-year) average applied to a new fund?

What fees does a donor pay to the Foundation?

When do charitable gifts get invested?

What does the Foundation do with its contributions?
Contributions made to the New Hampshire Charitable Foundation in most cases are pooled for investment
purposes in the Combined Investment Fund. There are over 1,300 component funds in the Combined Investment Fund, and a system of unitization, much like a mutual fund, allocates income and appreciation to each component fund. One of the advantages of pooling contributions for investment is that the size of the fund permits greater diversification of investments than would be possible for single funds. This, in turn, provides for greater opportunities without increasing risk.

What is the Foundation's investment objective?
Our investment objective is to preserve the future grantmaking capacity of your gift and provide sufficient funds to make current grants. Therefore, we invest your funds to deliver the same support in tomorrow's dollars as they do now, whether tomorrow is five, 10 or 50 years away. At present this means our total return (total return is defined as income plus change in market value) net of investment fees should exceed inflation by 5.00 percentage points per year.

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How are investment returns measured?
We measure investment returns in terms of total return, which includes interest and dividend income, as well as realized and unrealized gains and losses.

What is the role of the Investment Committee?
The Investment Committee is charged by the foundation directors to oversee the investment management of contributions made to the Foundation. The committee establishes a target asset allocation for the Combined Investment Fund, selects fund managers and monitors the investment performance of these managers. Committee members are volunteers with significant business and investment management experience, who work with Cambridge Associates, our investment consultants. The Investment Committee meets at least quarterly, and between meetings committee members and foundation staff confer with Cambridge Associates and fund managers regarding foundation investments.

Why is the Foundation invested in different asset classes?
In 1991, the Combined Investment Fund was entirely invested in balanced funds (domestic stocks and bonds) held by banks. The Investment Committee determined that the same or greater return could be gained, with less risk, if the portfolio was diversified among international as well as domestic stocks, global as well as domestic bonds, real estate and other nontraditional assets. The Combined Investment Fund is currently invested in each of these asset classes.

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How is the target asset allocation set?
The Investment Committee, with the assistance of Cambridge Associates, determines the best way to allocate the assets of the Combined Investment Fund among the following asset classes: U.S. equities, global ex-U.S. equities (other than the United States), fixed income, inflation hedging, marketable alternatives and non-marketable alternatives. The Investment Committee reviews the target asset allocation to determine if it is likely to meet the average annual investment return goal of 5 percent above inflation, net of investment fees. As gifts to the foundation are made, these funds are placed with one or more managers to achieve, or maintain, the target asset allocation.

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What is the role of Cambridge Associates?
Cambridge Associates is a Boston-based investment consulting firm that serves as consultants to the Investment Committee. Cambridge Associates currently works with 939 clients of which 663 are nonprofit institutions, representing $652 billion in assets. They assist the committee in determining the appropriate asset allocation for the Combined Investment Fund, selecting fund managers and monitoring the performance of managers selected. For more information on Cambridge Associates, visit www.cambridgeassociates.com.

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How are investment managers selected?
When the Investment Committee seeks a new fund manager for a particular asset class (domestic equities, for example), Cambridge Associates typically identifies managers with a three- to five-year outstanding track record for this asset class. The Investment Committee reviews these fund managers’ organizational profile, investment philosophy, investment process, professional staff and investment performance in both up and down markets, as provided by Cambridge Associates. The committee selects one or two of these managers to manage Foundation funds. View a current list of our fund managers.

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How are managers’ investment performance monitored?
At each quarterly meeting of the Investment Committee, Cambridge Associates provides an in-depth analysis of each manager’s investment performance. This analysis includes comparing each manager with others managing funds in the same asset class, as well as with the appropriate benchmark. These comparisons are provided for the last quarter, as well as for the last one-, three- and five-year period. In addition, the Committee monitors any organizational changes within an investment firm that may influence performance in the future, and confirms that each manager continues to adhere to the Committee’s investment guidelines. In addition to these quarterly reviews, Investment Committee members, foundation staff and Cambridge Associates also confer informally and regularly with fund managers regarding foundation investments.

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Does the Investment Committee ever change fund managers?
Yes. New investment managers are selected when the Investment Committee seeks greater depth in a particular asset class. The Investment Committee’s practice is to retain a manager for a minimum of three years, however several factors may lead to earlier dismissal. Reasons for dismissal of an investment manager include poor performance over a period of time, moving away from the investment discipline for which a given manager was hired, unfavorable changes in the organizational structure of the investment firm and loss of investment talent. The fact that a manager does not have a good quarter, or several quarters, compared to the appropriate benchmark for that asset class does not in itself provide reason for dismissal.

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Why does the Foundation have a charitable disbursement rate rather than distributing whatever is earned in a given year?
The charitable disbursement rate determines the dollar amount available for annual distribution. We determine this amount at the beginning of each year by multiplying the average market value of the Combined Investment Fund for the last 20 calendar quarters by the charitable disbursement rate, currently 4.03 percent as of 2012. This methodology smoothes out the peaks and valleys that would be experienced if income and dividends earned by a fund were distributed each year. It also helps to insulate fund beneficiaries from the volatility of the investment markets. Earnings for a fund above what is paid out in either investment or administrative fees, or what is provided in the annual charitable distribution, are reinvested in the fund. These reinvested earnings help each fund grow. Expressed another way: the larger the fund, the larger the charitable distribution. This is a strategy that has been adopted by most other major national foundations.

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How is the 20-quarter (five-year) average applied to a new fund?
The Combined Investment Fund is unitized much like a mutual fund. Each fund holds units and the market value of a unit is calculated each quarter. The 20-quarter average is calculated on unit value and then applied to the number of units a fund holds at the beginning of each year. This methodology allows the foundation to apply a 20-quarter average to a fund that has been at the foundation for less than 20 quarters.

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What fees does a donor pay to the Foundation?
Donors who establish a fund pay two fees: those for investment management and those for foundation costs. Investment management fees are those charged by the foundation's investment managers, investment consultant and custodian bank. The investment management fee changes as the mix of managers changes, but averages 1.1 percent. The investment results are calculated net of these fees. The foundation fee helps offset the costs associated with administering a fund, including bookkeeping, auditing and grantmaking due diligence. The foundation fee varies according to the fund type. View our fee schedule.

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When do charitable gifts get invested?
Gifts to funds may be made at anytime during the year and are invested at the end of each quarter. Interest earned on funds held in short-term cash accounts, whether for investment at quarter end or for short-term grantmaking, is retained by the foundation to help support operations. Interest covers administrative costs and helps support initiatives that promote leadership and philanthropy throughout the state.

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