Risk and Return

The Foundation has implemented spending and investment policies designed to achieve favorable returns while minimizing risk for endowed funds. Collectively, these endowed funds are referred to as the “Spending Policy Pool.” Pool assets include donor-restricted contributions that the Foundation must hold in perpetuity or for a specified period of time.

Annually, the Foundation creates a target return for funds invested in the Spending Policy Pool. Target returns are the sum of the pool dividend, actual fees, and the year-to-date inflation.

The chart on the left illustrates the Spending Policy Pool’s trailing (historic) net returns versus both the target return and a passive benchmark. The passive benchmark represents the weighted average return of various equity, bond and commodity indexes.* It is designed to exemplify the typical returns of a highly diversified investment portfolio. The chart on the right compares the risk of the Spending Policy Pool vs. the passive benchmark. The comparison is expressed in terms of standard deviation. Standard deviation is a statistical measurement in the variation of monthly returns. The lower the standard deviation, the lower the risk. The Foundation’s goal is to achieve a standard deviation that is approximately 20% lower than the passive benchmark.