2020 Endowment Prospectus - Children's Medical Center Foundation

Endowment Prospectus

For more than a century, Children’s Health has been guided by the mission to make life better for children.

Since our beginnings as a baby camp for sick children on the lawn of Old Parkland, we have grown into the leading comprehensive pediatric health care system in North Texas with the support of generous donors who understood the importance of building a legacy.

In 1978, Children’s Health received its first endowment contribution of $100,000 through an estate gift. Following decades of similar generosity for permanent support, Children’s now benefits from a collective donor-designated endowment pool with a fair market value of more than $160 million.

Endowed funds are among the most significant assets of Children’s Health. The stable income stream they provide allows the health system to help more and more kids, even in uncertain times.

Growth of these assets is important. We are committed to maximizing the perpetual impact of your gifts through careful investment management. Our investment policies and strategies are designed to achieve benchmark returns as a prudent fiduciary.

Thank you for your continued support of the children in our community through your commitments to the health system. Your gifts unite you with previous like-minded generations.

Together, you assure the children of today and tomorrow that they will have the state-of-the-art facilities, health care and life-saving research they deserve.

Sincerely yours,

Brent E. Christopher President, Children’s Medical Center Foundation

SEARCHING FOR ANSWERS to the ‘good guy bugs’ in your gut and the link to pediatric cancer

Behind the door marked “Koh Lab,” masked doctors in white coats peer into microscopes.

A whiteboard is scribbled with science notes, and liquids tagged with handwritten masking tape are squeezed onto shelves.

This is the space where Dr. Andrew Koh has built a career caring for some of North Texas’ sickest children.

He’s looking for answers about how the “good guy bugs” in your gut – as he calls them – shape your immune system to prevent infections, block autoimmune complications and help you fight cancer.

He’s trying to understand how the gut microbiome impacts the immune system of cancer and stem cell transplant patients so he can develop new therapies to help his patients.

He and his team of researchers are one of the few pediatric groups in the world searching for these clues.

“Being a physician scientist is a really, really hard gig,” said Dr. Koh, Director of Pediatric Hematopoietic Stem Cell Transplantation at Children’s Health , which now performs on average 40 to 50 stem cell transplants a year – double the number of life-saving treatments from a decade earlier.

“You have to have this really crazy curiosity -- we call it fire in the belly. And you’ve got to be really stubborn and persistent. Those are the folks who can survive.”

But the advancement of Dr. Koh’s research depends on a steady stream of financial support.

For the last several years, he has held the endowed Edwin B. Jordan Master Physician in Pediatric Stem Cell Transplantation at Children’s Health, which the Jordan family established several years ago in honor of their problem-solving father who passed away in 2006.

Growing up, I could tell when my mom had been to the hospital that day.

She would talk about the people she met and what had happened. You could see a little sparkle in her eyes. She was so happy to have been part of it.”

Anne Jordan Logan

Edwin “Ed” Jordan was a businessman who, with his family, developed and constructed hotels around the world, as well as many commercial and residential properties in Texas and across the nation. He was also involved in health and educational causes and was a former board member of the Children’s Medical Center Foundation. His daughter, Anne Jordan Logan, now holds his seat.

“My dad was very proud to be a part of Children’s.

It was always important to him to help people,” said Anne, who worked alongside her dad with her brothers in a family real estate partnership. “After he died, we wanted to recognize and honor him in an area he contributed to for many years. We established an endowment so the gift would be ongoing.”

The Jordan family has been linked to Children’s Health for decades. Before Edwin joined the board, his wife, Louise, volunteered every week at the Children’s Corner Gift Shop at Children’s Medical Center Dallas when Anne was a teenager. And as an adult, Anne delivered toys to the hospital during the holidays before she became a board member.

“Growing up, I could tell when my mom had been to the hospital that day. She would talk about the people she met and what had happened. You could see a little sparkle in her eyes. She was so happy to have been part of it,” Anne said. “And my dad, too.

Children’s was a place that he loved, and he had a strong commitment to serving the hospital.”

A few years ago, Dr. Koh’s lab employed just five people and he had a single grant from the National Institutes of Health. He credits the support of the Jordan family for spurring his research forward. Now, his lab includes 11 researchers, and he has three NIH grants and funding from pharmaceutical industry partners supporting his ground-breaking work.

The hope: To land on an answer in the next couple of decades to change clinical care for pediatric cancer and stem cell transplant patients.

“You can’t underestimate how important it is to get this injection of support,” Dr. Koh said.

Distributions from the gift also gave his lab additional funds to purchase a machine that processed a backlog of fecal and tissue samples in a matter of hours – versus the several days it took his team to complete manually. That piece of equipment – the KingFisher Flex – has now been tapped by Dallas County to potentially down the line help process nasal swab tests for COVID-19.

“Everyone who is a doctor has this romantic notion of making a difference and saving lives,” Dr. Koh said. “It’s a fundamental human desire to hope that what you do is substantive and makes a difference.”

1%

9% 4% 3%

27%

TOTAL ENDOWED

BY AREA OF SUPPORT 9

2% 1%

4

35%

10%

2

5

27

8%

NUMBER OF ENDOWMENTS

BY AREA OF SUPPORT 30

8

ENDOWMENTS AT CHILDREN’S MEDICAL CENTER FOUNDATION Generous donors have established and contributed to more than 200 named endowments at Children’s Medical Center Foundation, all of which provide consistent support for myriad efforts that make life better for children.

Areas of support include research – both hospital-based clinical research and laboratory research at Children’s Medical Center Research Institute at UT Southwestern (CRI); supportive programs that help patient families like Child Life or Spiritual Care; charity care to help those in need of financial assistance for medical needs; scholarships and educational funds to continue investing in current and future pediatric caregivers; clinical programs that treat an array of childhood illnesses and injuries; and communitybased initiatives that improve the lives of all children where they live, learn and play.

Children’s Health remains grateful for visionary friends and partners who created a legacy by investing in these permanent funds that will carry the successes of Children’s into the future.

9 6

CHARITY CARE CLINICAL PROGRAMS CLINICAL RESEARCH COMMUNITY PROGRAMS CRI NAMED POSITIONS PATIENT/FAMILY SUPPORT PROFESSIONAL EDUCATION SCHOLARSHIPS/AWARDS UNRESTRICTED

1

GODLY PLAY

The three sat cross-legged on carpet squares in a serene room with soft lighting.

The Godly Play chapel is a quiet oasis next to a bustling hospital hallway.

“You want to get into this story and see what happens?” Ryan Campbell, Manager, Spiritual Care at Children’s Health , gently asked teenage Connor and his mom.

Diagnosed with Neurofibromatosis Type 2 – a benign tumor of the brain, spinal cord and peripheral nerves – Connor has been making these trips for several years to the Godly Play chapel to visit with Ryan before his appointments at Children’s Medical Center Dallas, the flagship hospital of Children’s Health.

While there, he tells Ryan that he’s glad to have finished a standardized test, how he got a new Persian cat named Portia and that he’s nervous for his next doctor’s appointment.

As a chaplain, Ryan calls himself a collector of stories like Connor’s – stories about something scary that is happening to them, something they have no control over – and he’s a master of capturing these stories through Godly Play. The multifaith method of storytelling allows children to find meaning and nurtures their spirituality in the hospital through imagination.

“It’s a way for children to sit with and spend time with the images, stories and symbols they encounter in an authentic way,”

What is something so precious to you that you might give up anything for?”

“The ability to be free from disease.”

said Ryan, who holds the endowed Katherine C. Carmody Directorship in Godly Play. “There’s no specific answer. It’s not fill-in-the-blank. The wonder is really wonder. And sometimes what you discover isn’t even something you can put into words.”

Ryan credits the infusion of endowed support to the success and growth of clinical Godly Play at Children’s Health, whose Godly Play Chapel next door to the Beatrice Menne Haggerty Chapel on the Dallas campus is one of the country’s only such chapels in a hospital setting. The financial support also has spurred the spread of clinical Godly Play to other pediatric hospitals across the country.

Typically used in religious settings, the team at Children’s Health developed a clinical curriculum that’s inclusive to all faiths and none and have been invited to conduct trainings on clinical Godly Play at conferences, other hospitals and academic institutions.

“Patients are able to take the story they see and the symbols they’re presented with to confront some of those existential topics that might be hard for grown ups to talk about with children, such as death, or feeling alone or trying to find meaning and purpose,” Ryan said.

Back in the Godly Play chapel, Ryan asked Connor, “What is something so precious to you that you might give up anything for?”

Connor listed some of the people in his life: his mom, his friends, his brother.

“The ability to be free from disease,” he added.

INVESTMENT SUMMARY Endowment Management Children’s Medical Center Foundation holds donor-designated endowment funds of more than $160 million.

The endowment assets are invested in a diversified portfolio which is constructed to maximize risk-adjusted returns and maintain purchasing power long term, while supporting the organization’s current needs. Portfolio investments include global equities, fixed income, real assets, and diversifying strategies.

ONE YEAR

THREE YEARS

FIVE YEARS

TEN YEARS

Total Portfolio (Net of Fees) 15.7% 7.4% 5.2% 6.7% Policy Benchmark 15.4% 7.4% 4.9% 5.7% Custom Global Equity Benchmark (Global Equity)

22.8%

11.8%

8.2%

9.0%

Russell 3000 (U.S. Equity) 31.0% 14.6% 11.2% 3.4% MSCI EAFE (International Developed Equity)

22.7%

10.1%

6.2%

6.0%

MSCI Emerging Markets (Emerging Markets)

18.9%

12.0%

6.0%

--

Bloomberg BC U.S. Aggregate (U.S. Bonds)

8.7%

4.0%

3.0%

3.7%

All fund performances as of 12/31/2019

ENDOWMENT DISTRIBUTION POLICY The current annual spending policy for endowments at Children’s Medical Center Foundation specifies a five-percent distribution of a rolling 12-quarter average of the ending fair market values of the fund.

Because the endowment-pool performance fluctuates from year to year, the use of a 12-quarter rolling average helps to stabilize the earnings. The five-percent distribution rate is reviewed annually in order to preserve and grow the endowments and to ensure they continue to provide sustainable, reliable support for the donors’ designated purposes. Distributions are made annually once an endowment is fully funded.

Endowment distribution policies comply with the Texas Uniform Prudent Management of Institutional Funds Act, as amended.

Distributions from each endowed fund are made to corresponding restricted accounts that ensure distributions are used according to each endowment’s intended purpose.

Many of the kids who receive care at Children’s Health™ are enrolled in either Medicaid or Children’s Health Insurance Program (CHIP), but many still struggle with the cost of health care. And some kids don’t have any coverage because their families don’t qualify for these government programs, and they aren’t able to receive commercial insurance. That’s where we come in to help provide care at no-cost or a discounted cost for families who meet certain income, household and other medical hardship criteria. Our ability to provide this charity care is enriched by endowed philanthropic support from donors who understood the need for this assistance would persist and grow. This continues to ring true, and we are grateful for this permanent support of our undeserved children and families.”

Jodi Landon, Vice President of Managed Care at Children’s Health

2020 INVESTMENT COMMITTEE Chair: Debra Brennan Tagg President, Brennan Financial Services

Lee Hobson Managing Partner, Highside Capital Management

David Kelly Chairman and CEO, Croesus and Company

Tom Montgomery Managing Member, Montgomery Capital Advisers

Dotti Reeder Managing Director, Tolleson Wealth Management

Michael Silverman Co-President & Chief Investment Officer, CH Investment Partners

Mark Zacheis Wealth Management Executive, BBVA Compass

Research is the future. If you don’t do the research, you’re not going to solve the problem. Every time we sit down with Drs. Sean Morrison and Ralph DeBerardinis and discuss how they are approaching childhood diseases through metabolic research, we come away with a completely different way of thinking about childhood diseases. And they’ve had a lot of success. They’re making great strides; we knew we had to keep this going. And investing in something that is successful, that becomes contagious. It’s exciting to see other donors who have come on board and really believe in the mission of CRI to bring about translational research from the research lab to the bedside. We’re huge supporters of endowments. They help institutions grow.”

Ric and Debbie Scripps, Scripps Family Charitable Fund of Communities of Foundation of Texas for Children’s Research Institute

For questions regarding current endowments or interest in establishing a new endowment fund, please contact Nicola Lawrence, Director, Planned Giving.

Nicola.Lawrence@childrens.com 214.456.8360 Children’s Medical Center Foundation 2777 N. Stemmons Fwy Ste. 1700 Dallas, TX 75207