The Investment Committee is given the authority of EC and the Board of Directors of the church with regard to the investment of church assets. They recommend investment objectives, ensure the wishes of donor-advised funds are being followed, and seek to keep the purchasing power of the funds (after inflation).
The current portfolio is roughly 2/3 (63%) weighted toward equities. The remaining third is roughly split between fixed income investments on one side and convertibles, hedge funds, and real estate on the other side.
Our ten year return, after fees and expenses, has been 4.9%, which is pretty good given that it includes the results of the 2008-2009 economic downturn (by comparison, the ten year return of the ECF growth fund—which is pure equities—was 5.2%). Since inception of the current portfolio in 1993, the annualized net performance has been 8.1%—a pretty good record.
The 2015 GC, through resolution C045, requested that our church divest from fossil fuels. This was a tricky mandate for the Committee to receive because it is actually contrary to how our church has historically engaged the question of social investing. The committee notes that since the 1960s, "the long-standing position of The Episcopal Church of engagement rather than divestment." They also note that when we divest from companies, we no longer hold ownership and, thus, can no longer work to lobby companies for change as stockholders. They note that the formal strategy on responding to this request is attached to the report in the Blue Book... but I was unable to find that attachment.
The committee also explored the implications of the current spending rate from our endowments. Our investment policy allows a draw between 4% and 5%, but the budget is based on 5% and, once increased allocations from the floor of General Convention are included, the actual draw has been closer to 5.7%. The Committee believes, baed on the simulations they ran through Mercer, that this draw is not sustainable in the long-term and will result in an erosion of the church's assets. Thus, they are recommending a gradual reduction of that spending rate over the next triennium, bringing the draw back down to a more manageable 4.5%.
Reactions to the Report
As is generally the case in TEC, our investments continue to be well-managed, producing competitive returns and enabling significant ministry to take place.
I agree with the Committee's hesitancy with regard to fossil fuel divestment, both for the reasons they note but also for reasons I articulated in my earlier essay on the Committee on Corporate Social Responsibility. I wish they had more clearly attached the report on their implementation plan, though.
As to the spending rate, the larger rate has been to enable programs of mission and evangelism to take place (full disclosure, one of which is being funded at my own parish). While I agree that it is not a long-term smart policy to draw at the higher rate, from a fiduciary standpoint... I also believe we are at a particular moment in our life as a church. There is new energy and passion around evangelism which is making a real impact on the life of our church. I believe that a higher draw that is funding this work will, in the long-term, make our church MORE sustainable, not less. We may have a smaller portfolio, but we will have more vibrant congregations and (hopefully!) more members engaged in the work of the church.
So, I support returning to a more manageable draw, but I would like them to give it at least one, if not two, more trienniums so that we can fully fund this new season of church planting and evangelism and see what returns that work will wind up bringing to TEC.
Note: You can click here for a list of all Blue Book Reports & Resolutions that have thus far been reviewed.
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