by Paul A. Olson
The Nebraska Peace Foundation now has about a million dollars in its permanent endowment. This money is a rainy day fund whose usefulness to NFP depends on its producing dividends or interest that can be spent as the main body of the fund cannot be spent out under law. All must be spent to educate people on the ways of peace. There is no doubt that sometimes NFP will take actions that will offend some of its supporters, and it will lose some of its current giving. It is then that the Nebraska Peace Foundation’s resources will allow the organization to speak with courage and forthrightness. So, the amount the permanent fund throws off is important.
The Nebraska Peace Foundation’s recent annual meeting saw the Board discuss a proposal from Morgan Stanley to place the stock section ($600,000) of this permanent fund in a managed account that will invest in two funds managed by ClearBridge ESG that would produce more returns for rainy day needs. ClearBridge has a 37-year history of socially responsible investing. The net returns on the funds recently have been better than our historical portfolio returns. To assist the transition, Morgan Stanley has discounted their standard management fee (1.5% of managed assets) to 1.36%. (For those unfamiliar with Clearbridge, it is a Franklin Templeton company that has a history of socially responsible investment since 1987. In 1990, it joined the Interfaith Center on Corporate Responsibility, and has since supported major environmental and UN initiatives on socially responsible investing.) We will continue to hold our Calvert fixed income positions (roughly $400,000) as before, and we will continue to use the Morgan Stanley preferred savings account for unrestricted funds.
The Board voted in favor of making this change. The foundation board members who voted for the change include Paul Olson, Marilyn McNabb, Mark Vasina, Jim Johnson, Ron Todd-Meyer, and Marian Carling. In order to make a tax-deductible donation to this fund, please send a check to the Nebraska Peace Foundation with “Endowment” in the memo line. All donations made to this account will help grow the fund that supports the educational work of Nebraskans for Peace. Rainy days will come often in this heavily divided culture, and we wish to speak with a clear and courageous voice.
New contributions to the Foundation would immediately be split between the ESG funds (40%) and the preferred savings account (60%), in compliance with the Foundation Board guidelines. We would review the need to balance our equity/fixed income mix periodically to determine whether to put additional dollars into the Calvert funds.
The MS cash account has been used to collect the income (interest and dividends) from our portfolio. This cash is unrestricted and may be transferred to NFP when needed. Calvert funds will continue to throw off their income into the cash account. However, the ESG funds will reinvest their dividends. Quarterly reports from MS will include dividend amounts so that when NFP needs these funds we will instruct MS to sell ESG funds to satisfy NFP’s need for the unrestricted portion of the ESG funds.
This strategy simplifies our investment decisions, provides easier tracking and reporting of restricted/unrestricted funds, and provides greater returns—all while satisfying our goal of responsible investing.
COMPARISON OF PERFORMANCE
MS provided substantial information about their proposal and the performance of the ESG funds. All documents provided by MS are included in a zipped file. The comparison of performance (net of fees) is easily summarized below:
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