This was extracted (@ 2024-03-20 21:10) from a list of minutes
which have been approved by the Board.
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WHEREAS, the Board of Directors desires to facilitate sound governance of the Foundation's financial assets, and WHEREAS, the Board of Directors desires to to establish the financial structures necessary to maintain an endowment NOW, THEREFORE, BE IT RESOLVED, the investment policy statement in Attachment CH be adopted; and be it further RESOLVED that the Treasurer be charged and entrusted with managing the Foundation's investments in line with the investment policy; and be it further RESOLVED, that the Treasurer be charged with regularly reviewing the investment policy and proposing updates. Special Order 7C, Investment Policy Statement, was approved by Unanimous Vote of the directors present.
ORGANIZATION
Established in 1999, The Apache Software Foundation ("ASF") is a
United States 501(c)(3) charitable organization, funded by individual
donations and corporate sponsors. Organizational affairs of the ASF
are managed following the bylaws (https://www.apache.org/foundation/bylaws.html).
PURPOSE
This statement establishes policies, guidelines, and procedures
related to all investable assets held by The ASF. In doing so the
policy:
* defines the duties and responsibilities of all parties involved in
the management of investable funds
* identifies the objectives, risk profiles, and benchmarks for each
purpose-driven investment pool
* outlines policies and procedures relative to the expenditure of
institutional funds
* serves to assist the Board in effectively supervising, monitoring,
and evaluating the investment of The ASF's management of the
organizations’ investments.
ROLES AND RESPONSIBILITIES
Board of Directors:
The Board of Directors has a direct oversight role regarding all
decisions that impact The Apache Software Foundation’s investable
assets. The Board must ensure that appropriate policies governing the
management of the portfolio(s) are in place and that these policies
are being effectively implemented. In doing so, the Board sets and
approves the Investment Policy Statement and delegates responsibility
for the management of these funds to the Treasurer. Based on the
advice and recommendations of the Treasurer, the Board shall:
* adopt an investment strategy that addresses the organization's
operating needs while reflecting the long-term risk-adjusted return
objectives of the endowment.
Treasurer:
The Treasurer shall not be held accountable for portfolio performance.
Instead, the Treasurer is responsible for the development, recommendation,
implementation and maintenance of all policies relative to The ASF's
investable funds and shall:
* present investment strategy recommendations to the Board. These
recommendations should address short and long-term objectives,
liquidity needs and diversification
* recommend the retention and/or dismissal of an Investment Advisor
and/or other outside professionals
* meet with the Investment Advisor on a regular basis (quarterly /
semi-annually) to evaluate and assess compliance with investment
guidelines, performance, outlook and investment strategies; monitor
asset allocation and rebalance assets
* on an annual basis, evaluate whether this policy, investment
activities, risk management controls and processes remain consistent
with set goals and objectives
The Treasurer and Assistant Treasurers shall also be responsible for
the day-to-day administration and implementation of policies
established by the Board and/or the Treasurer concerning the
management of investable assets. Specifically, the Treasurer shall:
* serve as the primary liaison between the Investment Advisor and/or
other outside professionals that may be retained to assist in the
management of such funds
* oversee the day-to-day operational activities subject to policies
established by the Board
* contract with any necessary outside service providers, such as:
Investment Advisors, investment managers, banks and/or trust
companies etc.
* ensure that service providers adhere to the terms and conditions of
their contracts; have no material conflicts of interest with the
interests of The ASF; and ensure that performance monitoring is
sufficient to provide the Treasurer with timely, accurate and useful
information
* comply with official accounting and auditing guidelines regarding
due diligence and ongoing monitoring of investments
* prepare and issue periodic status reports to the Board
Investment Advisor:
The Investment Advisor is responsible for all aspects of managing and
overseeing the portfolio. On an ongoing basis the Investment Advisor
will:
* monitor the asset allocation to promote diversification in the
portfolio
* implement an unbiased, open-architecture approach to
manager/security selection
* provide the Treasurer with quarterly performance reports
* assist the Treasurer with periodic reviews of this Investment Policy
including an assessment of the current asset allocation and
investment objectives
* supply the Treasurer with other reports or information as requested
* attend meetings with the Treasurer and/or Board concerning
performance results, economic outlook, efficacy of investment
strategy, organization changes (if any), and any other pertinent
matters identified by the Board, and/or the Investment Advisor.
Custodian:
The Custodian will be responsible for the safekeeping of securities
held by The ASF. Additional responsibilities include the collection
of dividend and interest payments, redemption of maturing securities,
and receipt of delivery following purchases or sales. The Custodian
will provide accounting of all assets owned, purchased, or sold, and
the movement of assets into or out of The ASF's account(s).
Additional specialists, such as attorneys, auditors, actuaries, and
others may be employed by the Board to assist in meeting its
responsibilities and obligations to administer portfolio assets
prudently.
FIDUCIARY RESPONSIBILITY
In seeking to attain the investment objectives set forth in this IPS,
members of the Board, the Treasurer, Assistant Treasurer, the
Investment Advisor, and all other persons acting as fiduciaries, shall
exercise prudence and appropriate care in accordance with the Uniform
Prudent Management of Institutional Funds Act (UPMIFA). All
investment actions and decisions must be made solely in the interest
of The ASF and fiduciaries must provide full and fair disclosure to
the Board regarding all material facts pertaining to any potential
conflicts of interest. When making any decision relative to the
expenditure of donated funds, each of the following factors must be
considered, and properly documented, in the minutes or other records
of the applicable decision-making body:
* general economic conditions;
* possible effect of inflation or deflation;
* expected tax consequences, if any, of investment decisions or
strategies;
* the role that each investment or course of action plays within the
overall investment portfolio of the fund;
* expected total return from the income and appreciation of
investments;
* other resources of the organization;
* the needs of the organization and the fund to make distributions and
preserve capital;
* an asset’s special relationship or special value, if any, to the
organization’s purposes.
PROHIBITED INVESTMENTS
The following investments and investment activities are prohibited:
* Private placements
* Letter stock
* Derivatives (excluding mutual funds which may buy or sell
derivatives for the purposes of managing portfolio risk)
* Commodity contracts
* Short sales
* Margin transactions
OPERATING ACCOUNT
The ASF has established a demand deposit account to support its
day-to-day operating needs. The ASF will seek to maintain a target
balance of 50%-75% of the yearly expenses contained in the most recent
board-approved budget in this account to accommodate operating and
other expenses.
OPERATING RESERVE
The ASF has additional reserves set aside to serve as a separate
Operating Reserve. This portfolio is meant to meet the expenses
occurring as a result of unanticipated fundraising shortfalls or
unanticipated board-approved expenses, and to improve the return on
funds held in the operating account.
The objectives of this portfolio are in order of priority:
1.) Preservation of Principal
2.) Liquidity
3.) Rate of Return
The portfolio must be well diversified and consist of fixed-income
securities rated "A" or better.
ENDOWMENT
The ASF's Endowment is meant to support the organization in perpetuity
and thus has a longer time horizon and a substantially different risk
profile than the Operating Reserve. In all instances, donor intent
shall be respected when decisions are rendered concerning the
investment or expenditure of donor restricted funds. If a donor, in
the gift instrument, has directed that appreciation not be spent, The
Apache Software Foundation shall comply with that directive and
consider it when making decisions regarding the management and
investment of the fund. Any attempt to lift restrictions on any fund
shall be conducted in full compliance with the law.
Time Horizon:
The Treasurer seeks to achieve the investment objectives over a full
market cycle. The Treasurer does not expect that all investment
objectives will be attained each year and recognizes that over various
time periods the portfolio may produce significant over or under
performance relative to broad markets. For this reason, long-term
investment returns will be measured net of fees over a five-year
moving average.
Spending Policy:
Distributions from the corpus, income and/or appreciation of The ASF's
Endowment is prohibited unless approved by the Board in advance. The
Board will keep a record of its deliberations and address the factors
considered when making its decisions.
Strategy:
The Board and Committee agree that the benefit of investing in
securities with higher return expectations outweighs the short-term
volatility risk.
* Equity and equity-like strategies will be used for capital
appreciation.
* Fixed income and diversifying strategies will be used to lower
short-term volatility and provide stability, especially during
periods of deflation and negative equity markets.
* Cash is not a strategic asset of the portfolio but is a residual to
the investment process and will be used to meet short-term liquidity
needs.
Asset Class Guidelines:
Asset allocation will likely be the key determinant of the portfolio's
total return over the long-term. Thus, diversification of investment
across multiple markets that are not similarly affected by economic,
political, or social developments is highly desirable. A globally
diversified portfolio with uncorrelated returns from various assets
should reduce the variability of returns over time. Asset classes are
not to be considered individually, rather, the inclusion or exclusion
of any particular asset class shall be determined by its potential
impact to the total portfolio.
The target asset allocation should provide an expected total return
equal to or greater than the primary objective of the portfolio while
avoiding undue risk concentrations presented by any single asset class
or category.
The Treasurer has adopted a long-term asset allocation policy that
identifies the strategic target weights for each of the major asset
classes. The table below highlights these asset classes and
identifies strategic target weights and allowable ranges.
Asset Allocation:
Target Low High
Equity 60% 40% 75%
Fixed Income 40% 20% 55%
Cash / Cash Equivalents 2% 1% 10%
Rebalancing:
The Investment Advisor is expected to continually monitor the
portfolio mix and provide quarterly reports to the Treasurer. Neither
the upper nor lower limits of the asset allocations are intended to
require portfolio activity for the sole purpose of complying with the
guidelines; however, deviations from these guidelines will be treated
as discussion topics at portfolio review meetings with the Investment
Advisor. Rebalancing should be considered at least annually. It is
recommended that the target allocation be maintained so that the
portfolio will be able to achieve its long-term goals.
Manager Selection:
The Investment Advisor's selection of Investment Manager(s) must be
based on prudent due diligence procedures. A qualifying Investment
Manager must be a registered investment advisor under the Investment
Advisers Act of 1940, or a bank or insurance company.
Active Versus Passive Management:
Asset allocation will be implemented using both active and passive
investment managers. Highly efficient areas of the capital markets
may be managed using lower cost index or exchange traded funds while
other asset classes may be managed using active managers and
strategies that the Advisor believes have the ability to outperform.
Investment Advisor Performance Review and Evaluation:
Performance reports generated by the Investment Advisor shall be
compiled at least quarterly and communicated to the Treasurer for
review. The investment performance of the total portfolio, as well as
asset class components, will be measured against commonly accepted
performance benchmarks and relevant indices. Consideration shall be
given to the extent to which the investment results are consistent
with the investment objectives, goals, and guidelines as set forth in
this IPS. The Treasurer intends to evaluate the portfolio(s) over at
least a three-year period but reserves the right to terminate an
Investment Advisor for any reason.
Benchmarks:
The primary investment objective is to achieve a total return
exceeding that of the target weighted benchmark established by the
Treasurer over a full market cycle. This target benchmark will be
each asset category benchmark (or appropriate substitute) weighted by
its target allocation. The relevant benchmarks for each asset class
are as follows:
Asset Class Benchmark
Domestic Equity S&P 500
International Equity MSCI World Equity Ex US NR USD
Fixed Income Barclays Capital U.S. Aggregate Bond
INVESTMENT POLICY REVIEW
The Treasurer will review this IPS at least annually to determine
whether the stated investment objectives remain relevant. It is not
expected that the IPS will change frequently. In particular,
short-term changes in the financial markets should not require
adjustments to the IPS.