Alaska Literacy Program
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Alaska Literacy Program
1345 Rudakof Circle Suite #104
Anchorage AK, 99508
(907) 337-1981
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Endowment Guidelines

POLICY OBJECTIVES:

  1. To protect and keep the principal (corpus) of the endowment inviolate.
  2. To have a balanced portfolio of investments that yields maximum income from the principal earning an average annual real return (inflation adjusted) of at least 5% per year.
  3. To create a stable source of funds to underwrite the programs and administration of the Alaska Literacy Program.

INVESTMENT POLICY:

The long term goal of the ALP endowment Fund is to reach the mark determined by the Strategic Plan of the organization. Growth of the Endowment Fund shall come from contributions and the re-investment of earnings and capital appreciation. The fund's investments shall be diversified as to sector, quality and maturity. The Fund will manage its investments with a long-term view and seek to achieve returned commensurate with the marketplace for equity securities and intermediate term fixed income securities. The Fund will maintain a strategy of balance between equity and fixed income securities. Fixed income securities will be a source of cash flow for ALP and equity securities will provide growth for the Fund.

I. FIXED INCOME SECURITIES

  1. Limited to one hundred (100) percent of Fund assets.
  2. Authorized investments:
    1. Fixed income mutual funds or a diversified, managed portfolio of government and corporate bonds. The mutual funds or bond portfolio will have an average duration of three to seven years and generally seek to achieve or exceed the performance of the Lehman Brothers Intermediate Term Government/Corporate Index.
    2. Managed portfolios will permit the following investments:
      1. Cash, certificates of deposit, Bankers acceptances, CDs/Bas, and Euro dollar CDs.
      2. US Treasury Bonds, Notes and Bills, and debt issued by US Government Agencies.
      3. Corporate bonds rated Baa (Moody's) or BBB (S&P) or better.

II. EQUITY SECURITIES

  1. Limited to sixty-six and two-thirds (66 2/3) percent of fund assets.
  2. Authorized investments: Mutual funds or portfolio of stocks which approximates the Standard and Poors 500 Index (S&P500).
    1. Common stocks, preferred stocks, convertible preferred stocks, and convertible bonds of domestic companies in the S&P 500 Index.
    2. Portfolio to include substantially all stocks included in the S&P 500 Index in substantially the same proportion as the S&P 500 Index.

III. INVESTMENT EXCLUSIONS

  1. The following types of investments shall be excluded from the ALP Endowment Fund (not the ALP portfolio): Real estate, limited partnerships and private placements.

IV. STRATEGY

  1. The portfolio shall be in professional managed mutual funds or accounts managed by a professional investment manager.
  2. Selection of mutual funds and selection of managers will be determined by recommendation of the ALP Finance Committee and ALP Board approval. Allocation of assets between equity and fixed income securities will be as determined form time to time by the ALP Finance Committee.
  3. The first priority investment objective is to protect the principle portion of the Endowment Fund and to allow for capital appreciation, and secondly, to provide income from the ALP's fixed income securities and equities portfolio. The portfolio should be invested without consideration to the taxable nature of the earnings.

SPENDING POLICY:

The primary objective of ALP's endowment spending policy is to achieve a proper balance between present and future needs of ALP. Other long-term objectives are to achieve a reasonable degree of stability and predictability in income available for operations and to insulate ALP's investments managers from any pressure to produce short-term gains as opposed to achieving the best total return over the long-term.

I. SPENDING RULE

  1. To protect and keep the principal (corpus) of the endowment, spending (payout) will be limited to earning from income or growth (capital appreciation).
  2. The transfer of spendable earning to current operations will be determined by recommendation of the Executive director and subject to Board approval.
  3. Expenditures are to be supported first from current income (interest and dividends) and, as required, from realized gains.

II. SPENDING RATE

  1. Spending will not exceed 5% of the three-year moving average of the endowment's market value.

 

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