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Foundation Report from the Board :: Spring 2013

Report from the Board Annual Philanthropy Awards and Legacy Celebration This year’s Legacy Celebration recognized our donors and recipients and celebrated our Philanthropy award winners. Displays representing the many and varied accomplishments of our undergraduate and graduate students opened the event. The program held in the Recital Hall was opened by Robert K. Martin, vice president for University Advancement, who welcomed everyone! Dr. William L. Perry, president, Eastern Illinois University, shared special greetings from the University. Donors were recognized for their substantial commitments to EIU and were inducted into lifetime giving societies and presented with a lapel pin. Our guest speakers shared their personal endowment stories about why they became donors and recipients and how they benefited from their scholarships and awards. The generosity of our donors was highlighted with the presentation of the Burnham and Nancy Neal Outstanding Philanthropist Awards for 2012 to Carl Mito and Julie I. Nimmons. Mr. Martin closed the program with a campaign impact report. A reception, including musical performances by the Department of Music, was held immediately following the program in the Doudna Concourse. Read on for more information about our recipients. LIFETIME & HERITAGE SOCIETY PIN RECIPIENTS Robert K. Martin, vice president for University Advancement, announced each society. As he read the names of the recipients in attendance, University President William L. Perry and Foundation Vice President Christine Reid Robertson presented them with their pins. For a complete list of society members, please see the upcoming 2012 Honor Roll of Donors.

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

Inducted into the Old Main Society, which honors those individuals who have made a lifetime contribution to the University of $100,000 to $500,000, were: David and Phyllis Sardella, Roger Sorensen. Inducted into the Keystone Society, which recognizes individuals who have made a lifetime contribution to the University of $50,000 to $100,000, were: Diane Jackman, Hank and Jill Nilsen, William and Linda Perry. Inducted into the Cornerstone Society, which honors individuals who have made a lifetime contribution to the University of $25,000 to $50,000, were: Dwight Baptist, Doug and Mary Bower, Tim and Gail Mason, John and Margaret Messer, J. Anthony Nelson, Don and Ferne Rogers. Inducted into the Heritage Society, which recognizes those who have made the commitment to support the University, its students and its programs through planned gifts such as bequests from their estates and life insurance policies, were: Al Longtin, Rose Ann Sigborn. continues on page 2‌

In This Issue Annual Philanthopy Awards and Legacy Celebration

1

Outstanding Philanthropists

2

University Report

3

Committee Reports

4

Special Word from the Investment Committee

5

Visionary/Heritage Societies

7

Annuitant Ambassador of the Year

8

Dates to Remember

8


Foundation Report from the Board :: Spring 2013

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… continued from page 1

2012 OUTSTANDING PHILANTHROPISTS This award is bestowed upon individuals and organizations who have demonstrated dedication and commitment to the academic and cultural well-being of Eastern Illinois University by providing sustaining financial support through lifetime contributions, pledges or planned gifts, and service to the University and the community. Carl Mito ’72, managing director of investments at Oppenheimer & Co. Inc. in Chicago, has volunteered in a variety of capacities at EIU, including as a member of both the School of Business Advisory Board and the EIU Foundation. A three-term member of the School of Business Advisory Board, he was an early supporter of the Securities Analysis Center and later hosted events in his Chicago office to connect business graduates with the University and promote the center’s benefits to students. He and his late wife established the Carl and Marion Mito Excellence in Finance Endowment Fund in 2003 to benefit the School of Business on an ongoing basis as part of his philanthropic commitment, which includes nearly $325,000 in gifts to support the University’s students. A member of EIU’s Capital Campaign External Steering Committee, which provided guidance as the University significantly exceeded its goal earlier this year, Carl also delivered the commencement address to EIU’s graduates in December 2011.

Julie I. Nimmons ’77, a former member of the EIU’s Board of Trustees who also served as the volunteer chair for the University’s recently completed capital campaign, is recognized as a national leader in the sporting goods industry. As an owner of Schutt Sports, she was twice named one of “25 Leaders to Watch” by Sports Edge magazine and was the first woman elected to the board of directors of the Sporting Goods Manufacturers Association, later serving as the organization’s chairperson. A leading manufacturer of sports-related gear, including baseball, softball and football helmets, and the bases utilized by Major League Baseball, Schutt was recognized numerous times under Julie’s leadership and selected as the Equipment Manufacturer of the Year by Sporting Goods Business Magazine in 2004. She has also been featured on CNN’s “All About Women,” and in 2010, she was inducted into the National Sporting Goods Association’s Hall of Fame. The recipient of an Honorary Doctorate of Public Service from EIU in May 2012, she and her husband, Ken, endowed the Nimmons Family Scholarship for EIU students, and the Nimmons Keyboard Studio in the Doudna Fine Arts Center on campus is named in recognition of her family’s support.


Foundation Report from the Board :: Spring 2013

University Report This is one of my favorite times on campus. The snow is gone and the spring rains have started to bring our beautiful campus back into full bloom. It’s also a time of celebration here at Eastern. Our annual arts festival – aptly named “Celebration” – takes place. We also celebrate the generosity of our donors and the success of our students through the Legacy Celebration. And, finally, we prepare to send our seniors into the world as they graduate from the University. In fact, in my mind, the two most exciting days on campus are move-in and graduation. On move-in day, we celebrate all the possibilities of a new academic year and the rich opportunities ahead of our students. At graduation, we celebrate the completion of one phase of life and the rich set of possibilities for our graduates as they step into the world. We have worked hard to teach them to expect greatness in themselves and others, and now we have the privilege of watching them apply what they have learned here at Eastern as they begin their careers or move on to advanced degrees. During the spring, we also have the chance to celebrate the return of our generous alumni and friends through the Legacy Celebration. At this year’s celebration, I had the chance to re-connect with many individuals whose generosity helped make our “Expect Greatness” campaign such as success. I also had the chance to meet some new friends who are committed to helping us continue to move forward and make a real difference in the lives of our students. Best of all, I was able to see our students showcase some of their research and projects. I watched them light up as they explained their projects to our distinguished visitors. And, I watched the audience in our Recital Hall listen intently as five different people – from a current student to a faculty member to a retired professor – tell their stories and explain the impact of gifts to the Foundation. I also want to congratulate Julie Nimmons and Carl Mito, who were recognized at the Legacy Ceremony with Outstanding Philanthropist Awards. We are honored to have your support, and we look forward to working with you for many more years. EIU continues to be a high-performance, comprehensive university that is an affordable choice for higher education in the region. We’re working hard to keep future increases in tuition and fees to a minimum while continuing to enhance the already high quality of our programs. We are on pace to increase the size of the next freshman class, and we’re reaching out to prospective students more effectively than we ever have. We have re-engineered our recruitment and admissions process to implement a more personal approach, and we have developed new merit scholarships to help attract students. As always, I want to thank all of you for your commitment to Eastern Illinois University and for your generous support. Thank you,

William L. Perry, Ph.D. President

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Foundation Report from the Board :: Spring 2013

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The Board met on February 8, 2013, to receive reports from the University and to consider action taken by its committees.

Committee Reports The Real Estate Committee received a report from Mr. Pat Harrington, farm manager from First-Mid Illinois Bank and Trust. He stated that the short-term market environment for cash grain farms is very positive. Last year, crop yields in the U.S. were below average. Due to the impacts of the drought, grain prices rose and have remained high. Grain exports have declined, and the profitability of producing ethanol has weakened. Usage levels may be impacted for the next few years due to the damage done to the demand base for grains. Current price levels are expected to support an all-time high in the amount of acreage planted in 2013. The Finance/Audit Committee reviewed the Financial Statements and Operations Report, December 31, 2012. Mr. Bill Robinson said the financials continue to look very strong, with total assets up about $9.5 million from the prior year. He said the committee is reviewing a long-range budget which will help plan for the future so we can keep our operating expenses as low as possible.

The Oversight & Outreach Committee heard a report from Ms. Christine Robertson. She reported that Ms. McDaniel, Ms. Marchuk and Ms. Zytka have completed the online interactive ethics training required for University employees. Ms. Robertson also recommended that each committee review existing policies that fall under their jurisdiction before the June meeting so that any necessary revisions or updates can be proposed to the full Board at that time. 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 stated that the electronic scholarship system was implemented during the fall semester, and the departments are working hard to advertise their scholarships, review applications and work with the selection committees to identify recipients so that all scholarships are awarded.

Performance Report from the Investment Committee At its February 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 Crystal Lin. The committee also reviewed the performance of the Foundation’s portfolio as of December 31, 2012, as presented from Mercer Hammond. As of December 2012, the Endowment had a market value of $57.1 million. Since the 7/31/98 inception date, the Endowment earned 5.9%, 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 4.3%. The performance of the Foundation’s portfolio as of March 31, 2013, is presented on the next page from Mercer Hammond. As of March 31, 2013, the Endowment had a market value of $59.5 million. Since the July 1998 inception date, the Endowment earned 6.1%, 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 4.5%.


Foundation Report from the Board :: Spring 2013

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EIU Foundation Endowment

Executive Summary, March 31, 2013

Portfolio Objectives and Expectations (last updated: 2/2013) Spending rate Administrative Fee Inflation Rate Management Fee Total Return Needed Net Return Needed

Sources of Portfolio Growth

Beginning Market Value

4.25% 0.75% 2.50% 1.00% 8.50% 7.50%

2012

$57,117,923

$50,832,828

($ 79,713)

($ 426,586)

Investment Earnings

$ 2,436,936

$ 6,711,681

Ending Market Value

$59,475,346

$57,117,923

Net Additions/Withdrawals

Long Term Expected Return 8.40% 10-yr. Horizon Return 7.30% Standard Deviation (1 yr.) ±12.30% Lowest Likely Return (1 yr.) -20.60%

Calendar YTD

EIUF-Endowment

1.6

4.3

13.1

10.8

9.4

5.5

6.1

Broad Policy Index

1.3

4.4

10.4

7.8

7.5

3.2

4.5

70% S&P 500/30% Barclays Agg 2.6

7.3

12.4

11.0

10.8

6.1

5.0

source: Mercer Hammond

A Special Word from the Investment Committee June 5, 2013 In 1932, Irving Berlin famously asked the lyrical questions, “How Deep Is The Ocean? How High Is The Sky?” During the 2008-2009 Financial Crisis, panicked investors around the world also asked, “How deep is the ocean (the stock market decline)?” The Standard & Poor’s 500 and the Dow Jones Industrial Average attained all-time highs in 2013, prompting investors to now ask the corollary to that provocative “deep” question, “How high is the sky (the market rally)?” Diversification is a key for long-term investment health and survival. In conjunction with our investment consultant Mercer Hammond and using Mercer’s definitions, the Eastern Illinois University Foundation has used elements of Strategic Asset Allocation and Dynamic Asset Allocation in our diversification strategies. We have used Strategic Asset Allocation to rebalance our portfolio weights when the underlying asset class, such as stocks, rises or falls to bring the asset weight back to its long-term target. That process means reducing the best

performing asset classes while adding to the assets that have underperformed. We have also used Dynamic Asset Allocation to shift our portfolio mix to capitalize on attractive investment opportunities based on Mercer’s long-term valuation work. While Dynamic Asset Allocation implementation has market timing risk, the approach has allowed us to capture some of the market and economic conditions that can favor various asset classes over longer periods of time. Our Asset Allocation changes are designed to reduce risks and improve rewards over the targeted benchmark. Author Neale Donald Walsche wrote, “Life begins at the end of your comfort zone.” Indeed, for those who invest in financial markets during periods of deep skepticism or sell as financial

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Foundation Report from the Board :: Spring 2013

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… continued from page 5

markets are in the midst strong rallies; they might discover life from a new perspective outside their normal comfort zone. We profess to having not known “How deep the ocean” during the Financial Crisis decline nor, now, “How high the sky” as the bull market has evolved. Rather, in conjunction with Mercer, we looked at various valuation based risk/reward scenarios in order to make prudent asset allocation decisions consistent with our long-term objectives -- despite the fact that those decisions might take us out of our “comfort zone” for a period of time. As an example, the Eastern Illinois University Foundation tested our comfort zone in previous years when we added to our U.S. stock holdings during the 2008-2009 decline -- a very tense period, indeed. Likewise, during the recent bull stock market rally, we shifted a portion of our domestic stock holdings into global equities, which have lagged the U.S. markets and provide attractive valuations. The valuation differential between U.S. growth stocks and U.S. value stocks has dissipated. Consequently, we shifted portions of our overweighted U.S. growth stock holdings, an outperforming area in recent months, into a more diverse group of U.S. stock holdings. The “comfort zone” investing issue is not limited to stocks -- Fixed Income holdings also have been in the mix. Over the past several years, the stock market decline caused many investors to abandon stocks and buy the perceived safety of bonds. Yet, with interest rates at extremely low levels, the current risk to owning bonds has risen as bond safety is now more tied to the credit of the bond (i.e. the ability to pay back the debt) instead of the comfort of the coupon. While an investor will receive the value of a bond at maturity, as long as the company’s wherewithal to pay remains intact, the risk of owning a bond currently is two-fold. First is the risk of an interest rate rise, which would result in a decrease of the current value of the bond. Simply put, if economic growth picks up, low interest rate levels will not persist and bonds will decline in value. Second is the opportunity risk of holding an asset that pays a low rate of return when other alternatives are available to own, which can provide a higher yield. To combat the low interest rate scenario over the past few years, the Endowment shifted around 4% of the portfolio from U.S. Fixed Income holdings into higher yielding International Fixed Income holdings. We recently moved a portion of our Fixed Income into the DoubleLine Total Return Fund, which has a heavier emphasis on higher yielding mortgage securities. Finally, we further decreased our Fixed Income holdings and added to our Hedge Fund of Funds, which has provided the portfolio with over a double-digit return in the calendar year-to-date. The process of going outside your comfort zone in asset allocation decisions requires, to a certain degree, being a contrarian. In other words, you have to lean against the prevailing wind, which is not an easy feat. In effect, we have institutionalized being a contrarian by utilizing the Mercer Hammond risk/reward analysis models as our touchstone. By doing so, we gradually sell off assets that appear expensive and buy those that appear cheap, which provides a well-thought out way to participate in the underlying economic risks. In early 2009, we could have very easily let our emotions rule when the facts suggested a very different conclusion, i.e. selling stock holdings at the bottom of the market when risk/reward suggested we should be buyers. Since no one will know with certainty “how deep the ocean” nor “how high the sky,” we will never completely get into the market at the bottom nor out at the top. But, we continue to utilize long-term risk/reward parameters via the Mercer valuation work, which has helped us participate in the long-term returns generated throughout various asset classes. We believe our process has resulted in attractive returns versus our long-term growth target over the years, as well as against various index measures. We will continue to be vigilant stewards of your contributions to Eastern Illinois University.

Donald L. Gher, CFA Eastern Illinois University Foundation Investment Committee


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The donors of these endowments are providing long-term support with funds for scholarships, faculty research grants and/or educational and cultural enrichment programs for the university. Don and Ferne Rogers and Daughters Scholarship Stanley and Frances Campbell Memorial Scholarship Judy Ethell Memorial Fund 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 for the Annual Scholarship or Fund to ensure the gift is directed according to the donor’s wishes. The following memos of understanding have been approved: Hollen Student Professional Development Assistance Annual Fund Brian Reed Excellence in Jazz Annual Scholarship Habeeb Habeeb Annual Scholarship for Non-Traditional Students Decatur Breakfast Sertoma Annual 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 :: Spring 2013

2012 Annuitant Ambassador of the Year EIU Annuitants serve as volunteer ambassadors at the Neal Welcome Center, assisting our visitors, guests and students who come in to complete their scholarship paperwork. In recognition and appreciation of the Ambassadors’ service and dedication to the effort, the Board has selected Richard J. Barta as the 2012 Annuitant Ambassador of the Year. Richard represents the ideal volunteer with his professionalism, respectfulness to the students and staff, and the gracious way he handles his duties.

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%, contributing an amazing $63,696,747. Has your email address changed? If so, please contact Nancy Zytka at 217-581-7388 or nrzytka@eiu.edu.

Dates to Remember Oct. 18

Foundation’s Annual Meeting/Homecoming Weekend

Oct. 19

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

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EIU Foundation Spring 2013 Report from the Board  

EIU Foundation Spring 2013 Report from the Board

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