CULTURAL COUNCIL OF NOTES TO FINANCIAL STATEMENTS PALM BEACH COUNTY, INC.

For the Year Ended September 30, 2022

4. Endowments, continued

The State of Florida adopted the Florida Uniform Prudent Management of Institutional Funds Act (FUPMIFA), which provides a) consistent investment and spending standards to all forms of charitable funds, b) strengthens the concept of prudent investing, c) abandons historic dollar value as a floor for expenditures and provides more flexibility to the organization in making decisions about whether to expend any portion of an endowment fund, and d) provides a process for the release or modification of restrictions on a gift instrument. The adoption by the Council of the provisions of the new law did not have a significant change in its management and investment policies of endowments.

As a result of this interpretation, the Council classifies as net assets restricted in perpetuity by donor (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified as net assets restricted in perpetuity by donor is classified as net assets restricted for a specific purpose by donor until those amounts are appropriated for expenditure by the Council in a manner consistent with the standard of prudence.

Objectives

Generally, the endowment funds are used to further the mission of the Council. Endowment funds are used to provide sufficient liquidity to support ongoing operations of the Council, provide funds for capital expenditures as may be required from time to time, launch new initiatives, and build an endowment that will generate income that may be used for general operations and support the programs of the Council. Donor restricted endowment funds will be used for the purposes designated by the donors’ restrictions.

Investment Principles

Investments shall be made solely in the best interest of the Council. The endowment funds shall be invested with care, skill, prudence and diligence under prevailing circumstances, that a prudent person acting in like capacity and familiar with such matters would use in the investment of an organization similar to the Council.

The Investment Committee is responsible for the oversight and management of the Council’s endowment funds, adhering to the limitations established for each endowment. Investments of the endowment funds shall be diversified to minimize the risk of large losses resulting from overconcentration of funds in a specific maturity, issue or type/class of securities. In managing the endowment funds, the Investment Committee will consider the following factors, if relevant:

 General economic conditions;

 Possible effect of inflation or deflation;

 Role of each investment within the overall investment portfolio;

 Expected return (income and/or appreciation);

 The Council’s other resources;

 Need to make distributions for operating funds, need to preserve capital;

 Any special value an asset may hold for benefit to the Council; and

 To the extent applicable, any expected tax consequences of decision or strategies.

PALM BEACH COUNTY, INC.

For the Year Ended September 30, 2022

4. Endowments, continued

The Council’s endowment net asset composition by type as of September 30, 2022 consisted of the following:

Changes in the endowment net assets for the year ended September 30, 2022, and the reconciliation to the Council’s net asset categories is presented as follows:

Spending Policy

The Council’s Board shall annually determine the amount, if any, of funds to be allocated from BoardDesignated and/or Donor Restricted Endowment funds to working capital or capital reserves, provided that any such allocation is consistent with endowment restrictions. During the year ended September 30, 2022, there were no distributions made from the endowment.

5. Investments

As of September 30, 2022, major categories of investments were comprised of the following: