The Foundation exists to provide perpetual income for endowments that benefit charities and philanthropic desires in the Concho Valley. To serve this mission, the Foundation carefully studied how best-performing foundations invest funds in perpetuity.

The Foundation determined the best practice was to implement an investment policy of active investment management instead of passive investment management.

Active investment management seeks to outperform certain benchmarks with reasonable risk and expenses. Passive investment management seeks to replicate certain bench marks with minimum expenses. The Foundation determined the advantages of active management significantly outweighed the advantages of passive management.

The Foundation hired the investment firm of Frank Russell Investment Trust Company (Russell) in February 2003 as its active investment manager. Russell is the second largest manager of institutional funds in the world and has a stellar reputation in advising foundations, universities, and pension funds in the art of active investment management.

Russell recommends an investment portfolio that permits the Foundation to distribute 5% each year in grants. This philosophy allows the fund to grow during positive times and increases the fund value over time to protect the value of the investment against inflation.

While the Foundation has existed since 2002, the Russel portfolio has been in existence for decades, allowing us to see how an endowment fund would have performed prior to our existence, using the philosophy we have adapted. The graph below shows the value of the endowment and its increase in value. This allows distributions to equal more than 8% of the initial value by the 10th year.

The Foundation’s investment philosophy is reviewed constantly by the Foundation’s board of directors and its investment committee to ensure the perpetual nature of the Foundation’s funds.