Revised – August 15, 2024
The Kansas Masonic Foundation (the “Foundation”) takes seriously its stewardship responsibility as a manager of donors' gifts. It recognizes that each donation, no matter the size, reflects an implicit trust in the Foundation’s ability to invest resources wisely, and use the funds in accordance with each donor’s charitable wishes.
The responsibility for managing the Foundation’s investment portfolio is vested by the Board of Trustees in its Finance Committee (the “Committee”). This Committee sets policy, establishes performance benchmarks and continually monitors the performance of the Foundation’s portfolios against these policies and benchmarks. The Finance Committee reports to the Board of Trustees.
In seeking to attain the investment objectives set forth in this statement, the Committee shall exercise the appropriate care. In today’s rapidly changing and complex financial world, no list of types or categories of investments can provide continuously adequate guidance for achieving the Foundation’s investment objectives. Any such list is likely to be too inflexible to be suitable for market and investment environments which tend to change rapidly. Therefore, it is (i) the process by which investment strategies and decisions are developed and analyzed, adopted, implemented, and monitored by the Committee, and (ii) the overall manner in which investment risk is managed which will evidence an appropriate standard of reasonableness, care, and prudence in the management of the Foundation’s investments.
In selecting investment consultants, money managers and custodians for the Foundation’s assets, Committee members are expected to adhere to high standards in avoiding either the reality or the appearance of self-interest in decision making.
The Investment policy for the investable assets of the Kansas Masonic Foundation (“Foundation”) is intended to:
This document will be reviewed at least annually by the Investment Committee, Staff, and the Investment Consultant to ensure the relevance of its contents to current capital market conditions and investment needs.
This policy applies to the investable assets of the Foundation.
Support activities, programs and organizations that benefit Kansans while striving to be the premier Masonic Foundation serving humanity.
The total return of the Foundation is expected to exceed a weighted benchmark return, as described in Appendix A, based upon policy asset allocation targets and standard index returns over a full market cycle. Recognizing that shortfalls may occur over portions of the market cycle, this comparison will focus on both return and volatility.
The Foundation’s assets are to be sufficiently diversified to manage volatility. Diversification may be achieved by:
The possibility of short-term declines in market value is acceptable in order to achieve potentially higher long-term investment returns.
Asset Classes will be “clustered” into five different groupings based on the role they are expected to serve. The Investment Committee shall set target percentages and ranges for each of these portfolios. The Committee may choose not to allocate to any one or more of the groupings depending on risk posture, portfolio goals, comfort level, or liquidity needs. The five groupings shall be titled: Public Equity, Fixed Income, Marketable Alternatives, Private Markets, and Real Assets. The characteristics of each of these groups are as follows:
Results of the Fund, its components, each asset class, and investment manager will be measured over a full market cycle (typically 3 – 5 years and will include an up period and down period). The Committee will review quarterly updates from Staff and Investment Consultant to ascertain progress against assigned return objectives and other parameters.
The Committee is the named fiduciary with responsibility of the Foundation. The Committee recognizes its responsibility to manage the Fund with care, skill, prudence and diligence, providing adequate diversification in accordance with applicable laws and regulations, and to enhance long-term returns within the established risk parameters. The Committee has delegated certain responsibilities as described below to the Investment Consultant.
Review the Investment Policy and recommend appropriate changes for Committee consideration to meet the Fund’s objectives. Make recommendations, when deemed necessary, about objectives and policy provisions based upon material and sustained changes in the capital markets or the Foundation’s needs.
Evaluate and recommend, with supporting materials, the appropriate portfolio weightings among the different portfolios described in Section II.E. Additionally, evaluate whether asset classes are properly classified within the framework described in Section II.E on an ongoing basis.
Take responsibility for the decision to hire, retain or terminate Investment Managers. This will include taking the lead role in identifying and screening candidates for appropriate portfolios based upon performance and organizational characteristics. Investment Consultant will perform initial due diligence reviews and quantify the trade-offs between expected returns and risks among the various candidates.
Responsible for compensation negotiations with Investment Managers, Custodians and other service providers. On a regular basis, a review of compensation arrangements of providers will be completed to ensure fees are appropriate with current market levels.
Quarterly performance evaluation of the Fund and its component parts will be completed. A written report will be provided to the Committee following the close of the quarter. The written report will cover four basic areas:
The Investment Consultant will also make available regular qualitative analysis concerning each manager’s organization, philosophy, account and personnel growth and turnover and any other issues that may affect the manager’s ability to meet the Fund’s objectives.
Investment Consultant will attend meetings at the request of the Committee. The agenda will include (at a minimum):
Facilitate regular formal Investment Manager reviews and evaluations.
The Investment Consultant will assist the Committee and/or Staff in reviewing documents, drafting letters, and facilitating processes as requested.
Annually or upon material revision, provide a copy of the Investment Consultant’s Securities Exchange Commission Registration Form ADV, Part II.
Annually or upon material event, provide notification of the Investment Consultant’s organizational changes, including, but not limited to; terminations, departure of key employees, or additions to senior level staff.
This policy establishes several benchmarks from a top-down perspective to evaluate the value added from portfolio management and determine whether the Fund is performing above, at, or below expectation. The benchmark tool is designed to assist the Committee in determining the areas of strength in the portfolio, areas that may need improvement/attention, and when tactical opportunities may exist. Each of the five groupings (Public Equity, Fixed Income, Markets Alternatives, Private Markets, and Real Assets) serves a specific role in the portfolio and allocations to the different portfolios will have different goals. Therefore, each portfolio will have a ”long-term” and “short-term” benchmark. The long term performance of each portfolio should be evaluated relative to the long-term benchmark over a full market cycle (typically at least 5 years and includes an up period and a down period). The short-term benchmark will be the metric used for intra-cycle periodic performance evaluation.
Other Performance Measures and Diagnostics In addition to the benchmarking efforts described above, the Committee, Staff, and Investment Consultant will utilize numerous benchmarks, peer samples, diagnostic tools, comparative analytics, and risk measures as part of the ongoing monitoring and evaluation effort.
The Fund’s actual asset allocation shall be determined on a market value basis using values as reported by the Custodian. Actual allocations may deviate from guideline percentages at any specific period due to market conditions. When market conditions cause an asset class to move outside of its established ranges, Staff will actively pursue steps to bring it back within range over a reasonable period of time. If this is not feasible, a report with recommended action shall be presented to the Committee. Allocations may not knowingly deviate from allowable ranges without prior Committee approval.
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