EIU Foundation Fall 2013 Report from the Board
The Board met on June 14, 2013, to receive reports from the University and to consider action taken by its committees.
Foundation Report from the Board :: Fall 2013 Report from the Board The Board met on June 14, 2013, to receive reports from the University and to consider action taken by its committees. University Report President Perry thanked the Board for their partnership and stated that the Foundation plays an instrumental role in increasing philanthropy to provide funding for scholarships to help students with the costs of attending EIU. Dr. Perry reported that the Board of Trustees was fully seated and that Dr. Jan Spivey Gilchrist had been appointed as a new trustee, leaving no vacancies on the Board until 2017. He said the Board would hold its annual summer retreat on June 21 and the discussion would include the following: Strategic Enrollment Plan, program analysis and long-term affordability of an EIU education. He presented an overview of the following “points of momentum” at EIU: • The recent capital campaign was very successful and raised 27 percent more than the goal, almost two years ahead of time; • The Honors College offices would soon be moving to the second floor of the south end of Pemberton Hall; • EIU is a “Tree Campus”; • The Center for Clean Energy and Research and Education (CENCERE) was under construction north of the Renewable Energy Center; • EIU has been ranked as a “Green Campus” by Princeton Review; • EIU received the Governor’s Award for its work with veterans; • The model for admissions had been updated and includes the addition of Commitment to Excellence Scholarships; • EIU is ranked in the top five in the country for students with master’s degrees and who further complete doctoral degrees; • EIU Panthers won the OVC Commissioners Cup; • Four EIU sports were in the top 10 percent in the country for academic progress among NCAA Division 1 teams; • EIU was listed on the President’s Community Service Honor Roll; • EIU has had great success in reconnecting with many alumni to broaden the donor base; and • Boys and Girls State Track meets will continue to be held on campus, along with numerous sports and music camps. Board of Directors Timothy Burke, President Christine Reid Robertson, Vice President William Robinson, Treasurer Judy Ethell, Secretary Jason Anselment Mike Cunningham H. Michael Finkle Tim McCollum Sue C. Payton Janet Treichel Charles W. Witters In This Issue Annual Philanthopy Awards and Legacy Celebration Outstanding Philanthropists University Report Committee Reports Special Word from the Investment Committee Visionary/Heritage Societies Annuitant Ambassador of the Year Dates to Remember 1 2 3 4 5 7 8 8 Foundation Report from the Board :: Fall 2013 Page 2 The Real Estate Committee received a report from Mr. Pat Harrington, farm manager from First-Mid Illinois Bank & Trust, on the current status of the Foundation farms. He stated that all of the corn has been planted and about 95 percent of the soybeans have been planted. He discussed the impacts of the rain and cool weather on this year’s planting season, explaining that farmers are about 35-40 days behind where they’d like to be at this time of year. Nevertheless, a large crop production, along with lower prices, is expected across the Midwest. All 2012 crops have been sold and 25 percent of the 2013 crops have been sold. The Finance/Audit Committee met in May and reviewed the third quarter financial statements which showed total assets of over $74 million on March 31. The committee approved the FY14 operations budget which was based on a three-year planning budget presented at a special planning meeting held in February. Mr. Bill Robinson said we continue to maintain good management of expenses to keep our operating costs as low as possible. Committee Reports The Oversight & Outreach Committee heard a report from Ms. Christine Robertson. Ms. Robertson said the committee recommended two changes to the bylaws. The first change updated Mr. Robert Martin’s title from “University Vice President for External Relations” to “University Vice President for Advancement.” The second change amended the Board term limits to allow more flexibility and addresses appointments to fill unexpired terms created by vacancies. The Scholarships & Grants Committee received the Gift Acceptance Committee report, which lists the most recent gift agreements (see Visionary Society). The committee also received an update from Ms. Christine Edwards, Scholarship Coordinator. Ms. Edwards presented reports on the status of scholarships during the past year. Ms. Edwards said the number of scholarships not awarded has decreased since last year due to efforts to advertise scholarships, identify recipients and request amendments to scholarships with outdated criteria. At its May meeting, the Investment Committee received a report on the Student Management Fund, a portfolio of approximately $100,000 of Foundation funds managed by approximately 20 undergraduate students in the Security Analysis Center/Applied Student Securities Analysis class taught by Dr. Crystal Lin. Dr. Lin reported that the students placed third in the growth category at the RISE conference. Consequently, EIU may be featured in the Bloomberg report. The committee also reviewed the performance of the Foundation’s portfolio as of March 31 as presented from Mercer Investment Consulting. As of March, the endowment had a market value of $59.5 million. Since the 7/31/98 inception date, Performance Report from the Investment Committee the endowment earned 6.1 percent, annualized and net of fees. In comparison, the Broad Market Policy Index with the same broad asset allocation as that of the endowment would have earned 4.5 percent.. The performance of the Foundation’s portfolio as of June 30 is presented from Mercer Investment Consulting. As of June, the endowment had a market value of $61.3 million. Since the July 1998 inception date, the endowment earned 6.0 percent, annualized and net of fees. In comparison, the Broad Market Policy Index with the same broad asset allocation as that of the endowment would have returned 4.4 percent. Executive Summary, June 30, 2013 EIU Foundation Endowment Portfolio Objectives and Expectations (last updated: 2/2013) Spending Rate Administrative Fee Inflation Rate Management Fee Total Return Needed Net Return Needed 4.25% 0.75% 2.50% 1.00% 8.50% 7.50% Sources of Portfolio Growth Calendar YTD 2012 Beginning Market Value Net Additions/Withdrawals Investment Earnings Ending Market Value $57,117,923 $ 2,341,310 $ 1,827,216 $61,286,450 $50,832,828 ($ 426,586) $ 6,711,681 $57,117,923 Long Term Expected Return 8.40% 10-yr. Horizon Return 7.30% Standard Deviation (1 yr.) ±12.40% Lowest Likely Return (1 yr.) -20.70% EIUF-Endowment Broad Policy Index -1.8 -1.9 3.3 3.9 8.8 12.0 9.9 13.9 12.0 9.9 13.9 11.4 9.5 14.0 5.5 3.1 6.8 6.0 4.4 5.0 70% S&P 500/30% Barclays Agg -1.4 source: Mercer Investment Consulting Foundation Report from the Board :: Fall 2013 Page 3 A Special Word from the Investment Committee August 6, 2013 An investment axiom that appeared in the New York Times as early as 1905 standing the test of time as still relevant is, “Bears make money, Bulls make money but Hogs get slaughtered!” One can be bullish on markets and make money and one can be bearish on markets and make money. However, if one gets greedy, the loss will probably be great as the “door” closes quickly and the subsequent price change does not allow one out. By taking profits along the way, one can make money while avoiding the rush, and risk, of attempting to sell at the proverbial top. The Eastern Illinois University Foundation, in conjunction with our investment consultant Mercer, rebalances our portfolios when holdings veer away from our targeted range. By automatically selling over-weighted assets and adding to under-weighted assets, we are locking in profits if that overweighting came from an upward market move. U.S. stocks markets soared to all-time highs in 2013 and, in recent months, we sold a portion of our domestic stock holdings while reallocating the proceeds into other domestic stock sectors as well as international holdings, which have lagged but show better risk/reward potential. While the U.S. stock market continued to rally, we avoided the “greed” factor by locking in a portion of the huge gain that has occurred since the bull market started in March 2009. Additionally, we moved a portion of our domestic bond holdings into the fairly noncorrelated-to-markets hedge fund of funds sector. Further diversification of the portfolio, rather than concentrating too much of the holdings in one sector, helps control our risk. We believe that controlling our risk is the key to long-term rewards and diversification is the key to risk. The flip side of the diversification coin is that if one had owned only a completely undiversified portfolio of U.S. stocks during the fiscal year ending June 30, 2013, it would have provided superior returns as the Standard & Poor’s 500 was up 20.8 percent. But, that also would have been the riskiest proposition, not the type of risk we believe an endowment should be taking as illustrated by the massive 2008-2009 bear market decline for an all-stock portfolio. Hampered by a 2.4 percent decline in the Barclay’s Capital Aggregate Bond Index, a still relatively undiversified portfolio composed of 70 percent U.S. stocks and 30 percent U.S. bonds had a 13.9 percent return for the recent June ending fiscal year. With only about 42 percent in equity holdings, the EIU Foundation Endowment performed quite admirably during the most recent fiscal year. The endowment recorded a healthy 12.0 percent gain versus a Broad Market Policy Index return of 9.9 percent as measured by Mercer. Consequently, the endowment had a much lower risk profile than a relatively undiversified portfolio of 70 percent stocks and 30 percent bonds, but still captured a significant amount of the U.S. stock market upside. During the 2008-2009 Financial Crash, there was “no place to hide” as virtually all assets classes declined at the same time. However, the financial crisis was an extremely rare event, which was followed by stock market averages rebounding to all-time high levels four years later. The EIU Foundation Endowment suffered in 2008-2009, but it fell much less than our NACUBO (National Association of College and University Business Officers) Peer Group and, subsequently, rebounded more. We attribute our performance to judicious and proactive asset allocation aided by Mercer’s valuation work. Many have said history does not repeat itself, but it often rhymes. Although not probable, another crash across all financial markets is possible, so vigilance remains a watchword. A small glimpse of chaotic markets that could possibly occur came in June this year when the Federal Reserve Bank discussed the eventuality of “tapering” off its current Quantitative Easing (QE3) program of economic stimulation via bond purchases. QE tapering is not a question of if, but when. Market participants were quick to sell, driving interest rates up (when interest rates rise, bond prices decline) and stock prices down. Fed President Ben Bernanke basically said the Fed would taper, not quit, the easing if the economy and the unemployment rate were improving at certain levels--a good thing for future corporate profits it would seem. With the stock market sell-off, however, market participants signaled they believe that an improving economy is bad for stock prices. Many have called the current stock bull market the most hated in history because too many investors have missed the upside and want to see a deep downside correction to get invested, but it has not happened. Investors have missed the bull market for a variety of reasons, ranging from being unable to separate the laggard economy from robust equity performance to a media that has over-moralized the ills of Capitalism in serving the nation, which cast a gloom over the macro environment. Yet, despite many artificial regulatory roadblocks that were put in place in recent years hindering growth, the economy is healing. Corporate Profits, as a percentage of Gross Domestic Product, are already at the highest level since 1950. So, while tapering off QE could cause short-term market dislocations, it could also signal a stronger America in coming years. Foundation Report from the Board :: Fall 2013 continued from page 3… Page 4 We all look at the world, and markets, from different perspectives, biases and opinions while wondering why others don’t see things the way we do. Those conflicts are typified in the hottest song of the summer, the controversial Blurred Lines, when Robin Thicke sings, “If you can’t hear what I’m trying to say, If you can’t read from the same page, Maybe I’m going deaf, Maybe I’m going blind, Maybe I’m out of my mind.” Having a proven touchstone (in the EIU Foundation’s case, Mercer’s quantitative work, provides a valuable tool)to help negate our internal conflicts. Over the long-term, utilization of Mercer’s analysis to create an appropriate risk/reward structure via diversification helped the Eastern Illinois University Foundation navigate through the financial markets ‘blurred lines” and avoid the proverbial “hogs get slaughtered” scenario. Since the inception of the Mercer relationship in July 1998, the Endowment has risen an annualized 6.0 percent, well above the annualized returns of the 4.4 percent for the Broad Market Policy Index and the 5.0 percent for a less diversified portfolio composed of 70 percent stocks and 30 percent bonds. While there is no doubt financial markets will face tough times along the way in coming years, as they always do over long cycles, we are continuing to work closely with Mercer to serve you. Donald L. Gher, CFA Eastern Illinois University Foundation Investment Committee Foundation Celebrating 60th Anniversary Founded in 1953, the Eastern Illinois University Foundation will celebrate its 60th anniversary at the upcoming 2013 Annual Meeting on Oct. 18. We hope you will join us as we celebrate this important milestone. Foundation Annual Meeting Mark your calendars. The Annual Meeting will be held at 2 p.m., Friday, Oct. 18, in the Lecture Hall of the Doudna Fine Arts Center. The Board approved the following nominees for membership in the Class of 2018: Matthew Allen, Peoria, IL Larry Ankenbrand, Charleston, IL Maureen Ankenbrand, Charleston, IL *Roger Archibald, Saint Albans, MO *Identa Austin, Aurora, IL *Suzanne Baier, Phoenix, AZ *Dwight Baptist, Brentwood, TN *Scott Biermann, Clayton, MO *James Bradham, Las Vegas, NV *Martha Brown, Charleston, IL *Steve Childers, Charleston, IL *Pat Coburn, Chicago, IL *Dan R. Cunningham, Charleston, IL *Michael Cunningham, Marietta, GA *Katharine Curry, Saint Catharines, ON Henry Davis, Charleston, IL Robert DeBolt, Apollo Beach, FL Christopher Desmond, Glen Ellyn, IL *Roger Dettro, Mattoon, IL *Richard Dodson, Wilmette, IL *Martha Drake, Charleston, IL *Robert Dunn, Decatur, IL *James Evans, Scottsdale, AZ *Jeanne L. Foley, Mattoon, IL *Mary L. Gaskill, Charleston, IL *Donald L. Gher, Bellevue WA *Ronald Gholson, Charleston, IL *June B. Giffin, Charleston, IL *Susan L. Gilpin, Park Ridge, IL *Noelle Greathouse, Hindsboro, IL *Kenneth Hadwiger, Charleston, IL Mary Ann Hanner, Oakland, IL *William Hatfield, West Lafayette, IN *Carol Helwig, Charleston, IL William Hine, Terre Haute, IN *Dale Holt, Champaign, IL *Tom Hunse, Dallas, TX *John H. Keiser, Boise, ID Mark Kesler, Dewey, IL Tamara Kesler, Dewey, IL *Jennifer Ketchmark, Brownsburg, IN *Gary Kling, Champaign, IL *David Kuhl, Champaign, IL *William D. Lair, Charleston, IL *Herbert Lasky, Ashmore, IL Al Longtin, New Lenox, IL *Matthew Madigan, Charleston, IL *Victoria Markley, Chicago, IL Jaime Martinez, Naperville, IL *Thomas Maskey, Fairfax, VA *Ross McCullough, Alpharetta, GA *Dale McHenry, Lafayette, IN *James K. McKechnie, Champaign, IL Karen Medina, Chicago, IL *Michael Morrisey, Westfield, IN *John Oertling, Charleston, IL *Marilee Oglesby-Evans, Fairview Heights, IL *Gail J. Richard, Charleston, IL Charles Rohn, Champaign, IL Aldo Ruffolo, Charleston, IL *J. Sain, Charleston, IL *Joan K. Schmidt, Niles, MI *Jack Schultz, Effingham, IL *Jeffrey G. Scott, Richmond Hill, GA *Roger Sorensen, Mattoon, IL *Dennis Spice, Champaign, IL *Julie Sterling, Charleston, IL *Robert Sterling, Charleston, IL Charles Randy Taylor, Champaign, IL Sue Ellen Taylor, Champaign, IL *David E. Thomas, Naperville, IL Ron Tredennick, Minooka, IL Wendy Tredennick, Minooka, IL *Mary Ann Uphoff, Mattoon, IL Cindy Webb, Tulsa, OK *Wesley Whiteside, Charleston, IL Roger Whitlow, Charleston, IL *Renewing members are noted with an asterisk. Foundation Report from the Board :: Fall 2013 Page 5 Congratulations to Identa Austin who will be inducted as honorary lifetime member in the Foundation. She will join Harold Marker, Lou Hencken, Jan Tarble, Ike Kennard, Jim and Brenda Edgar, Dick Lumpkin, Burnham Neal, Max and Mary Cougill, Nathaniel Anderson, Joan Embery, Rudolph “Rudy” Hlavek, Ken Baker and Dr. and Mrs. Jerry Heath, who were previously inducted into this prestigious class. Honorary lifetime members have demonstrated a sincere dedication and commitment to the financial, academic and cultural well-being of Eastern Illinois University. Honorary Lifetime Members We are pleased to announce that Ronald Gholson and Paul Snyder will be recognized as Outstanding Foundation Members. Through their own unique ways, they have provided financial support or volunteered their time and talents to enhance the University’s academic, athletic and cultural programs. They will join Mike Conlin, Ruth and Charles Dow, John Inyart, Joyce and Matt Madigan, Mac Corley, Jerry Myerscough, Jim Schnorf, Jonathan Gosse, Sylvia Nichols, Alan Baharlou, June Bubeck Giffin and Dennis Spice in this special class of members. A reception will follow the annual meeting to celebrate the contributions of these honored members, and to thank all Foundation members for their continued support to the University. We hope you will join us. More information will be mailed at a later date. Oct. 18-20 also marks Homecoming weekend at EIU. Come see the many changes occurring on campus and then cheer the Panthers to victory on Saturday when EIU takes on Southeast Missouri State at O’Brien Stadium. Tickets may be purchased in person at the EIU Athletic Ticket Office, Room 2530 in Lantz; by phone 217-581-2106; or at the following website: www.eiupanthers.com. Check the Alumni Association’s website (www.eiu.edu/~alumni) in the coming weeks for more information on Homecoming activities. And while you’re checking out the University’s websites, please visit the Foundation’s website (www.eiu.edu/~found) for more photos from Legacy Weekend, past copies of the “Report from the Board,” and a current report on the endowment’s investment portfolio. You will also find more information about our Board of Directors and volunteers. Outstanding Foundation Members Foundation Report from the Board :: Fall 2013 Page 6 The Board’s Scholarships and Grants Committee and the Gift Acceptance Committee (an internal committee that now reviews and approves most gifts and endowment agreements) added the following scholarships and funds to the Visionary Society. The donors of these endowments are providing long-term support with funds for scholarships, faculty research grants or educational and cultural enrichment programs for the University. - The Edward “Mac” and Barbara Corley Undergraduate Economics Scholarship - Edward W. Marley Engineering Scholarship - The Edwin L. “Bud” May Award of Excellence in Funded Research - The Roy and Patricia Meyerholtz Education Scholarship - The Hope Brown Nelson Elementary Education Student Teaching Scholarship - The Eileen and Reuben Seltzer Scholarship for Adult Learners - Dr. John L. Roberts Scholarship in Management - Dr. John L. Roberts Scholarship in Middle School Education - Ronnie, Maxine & Jerry Cole Family Nursing Scholarship - Ron & Carol Jean (McHenry) Martin Communication and Theatre Scholarship A donor who wishes to fund an endowment through a bequest or by making regular payments over time (e.g., through payroll deduction, automatic monthly charges to a credit card or electronic fund transfers from a bank account), may wish to sign a Letter of Intent. This document ensures a donor that the Foundation is aware of his/her interest in establishing an endowment over time, and provides the means for a formal agreement to be written now, specifying how the endowment will benefit the university’s students, faculty or programs in the future. Sometimes a donor prefers to give a non-endowed gift for immediate use by the University. In this case, a Memo of Understanding is written to ensure the gift is directed according to the donor’s wishes. The Board approved cash in/cash out memos of understanding to fund The EIU Adult Fitness Program Outstanding Graduate Annual Scholarship, Angel Annual Scholarship for Nontraditional Students and the Robert Glover Annual Men’s and Women’s Soccer Scholarship. The Heritage Society honors those who make the commitment to support the university, its students and its programs through planned gifts, such as bequests from their estates or by designating the EIU Foundation as the beneficiary of their IRA assets or life insurance. We often get inquiries from donors asking how to write bequests to the university. Here is the information that you (or your professional adviser) will need to include us as a beneficiary in your last will and testament: Eastern Illinois University Foundation FEIN 37-6031320 860 W. Lincoln Avenue Charleston, IL 61920 Following is an example of appropriate language that you might use: “I [name] of [city, state, ZIP] give, devise and bequeath [$ amount, or % with estimated $ amount, or description of property] of my estate to the Eastern Illinois University Foundation, FEIN 376031320, located at 860 W. Lincoln Avenue, Charleston, IL 61920, to be used for the following [scholarship, fund, program], the provisions of which are outlined in a separate agreement.” Our directors of development would be pleased to work with you on drafting a gift agreement that will outline your intentions for the planned gift once your estate matures. The final document, signed by you and the Foundation, will give us specific instructions to ensure we administer your gift according to your intentions and objectives. The fully executed document will then simply be held in your file here at the Foundation until such time as your estate is settled. Donors who make planned gifts are recognized in the Foundation’s annual Honor Roll of Donors as a member of our Heritage Society. It is your decision whether you notify us of a planned gift made in your estate plan, and whether or not you would like recognition for doing so. Membership in the Heritage Society is non-binding. We would sincerely appreciate consideration of EIU in your estate plans! Please contact us toll-free at 1-866-581-3313 if you have any questions or desire additional information on making a planned gift. This information is not intended as legal, tax or investment advice. For such advice, please consult a professional adviser. Foundation Report from the Board :: Fall 2013 Page 7 For more information… Please visit the Foundation’s website (www.eiu.edu/found) to learn more about our Board of Directors and Committee Volunteers, and to see an updated list of Foundation members. The “EI&U Expect Greatness” campaign for Eastern Illinois University surpasses $63 million! Please visit their website at www.iameiu.com for more information (or go to Eastern’s homepage (www.eiu.edu) and click on the link to the campaign website) to see how they met the goal earlier than anticipated by 27 percent, contributing an amazing $63,696,747. Has your email address changed? If so, please contact Nancy Zytka at 217-581-7388 or email@example.com. Dates to Remember Oct. 18 Oct. 19 Foundation’s Annual Meeting/Homecoming Weekend Board Meeting Foundation Staff Leslie McDaniel, CPA, Executive Officer April Marchuk, Executive Assistant Nancy Zytka, Outreach Coordinator Eastern Illinois University Foundation Neal Welcome Center, 860 W. Lincoln Charleston, Illinois 61920-2405 Phone: 217-581-3313 Toll-free: 866-581-3313