From the Finance Committee - May 2000

During this year's Annual Meeting, you will be asked to support a much improved, board-endorsed constitution. While the entire constitution has been revitalized, one section in particular deserves some explanation, and that is our recommendations for the Endowment Fund.

Under our existing constitution, the language in the section on the Endowment Fund is vague. In the amended constitution, the language is more specific and encompassing. For example, the section on goals states, "The Endowment Fund shall be managed with a view to (i) the preservation of its principal, (ii) its growth at no less than the rate of inflation, and (iii) the realization of earnings and the distribution thereof on a stable basis for use in the Congregation's general operations or for specific purposes directed by the Board of Trustees."

With regard to distributions from the Endowment Fund, our policy has been to withdraw all the income earned in a year and apply it to that year's operating budget. This has led to budgeting uncertainties because the earned income can and will vary, sometimes substantially, from year to year.

We are recommending a more long-term approach for building equity and distributing the Endowment Fund's income gains. This approach would limit the annual distribution to our operating budget from the Endowment Fund to an amount equal to no more than 5% of the fund's value. This is a prudent and conservative methodology often used by professional financial planners, and will provide Congregation Albert with significant benefits.

This will ensure a more predictable stream of revenue from the Endowment Fund to the general operating account, while also allowing for continued long term growth of the fund itself. The assumption, of course, is the fund's assets will grow at a rate greater than inflation, which, by all historical measurements, is reasonable.

We hope you agree that we're making progress, and approve the amended constitution when it's presented to you on May 21st. What are your thoughts? Let us know by E-mail, if you have access: Contact Gary Singer at gsinger@earthlink.net; or by mail to the attention of the Finance Committee at Congregation Albert's office.

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