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Investment Philosophy

Effective stewardship of philanthropic assets enables the Community Foundation of Northwest Connecticut to fulfill its mission of building permanent charitable funds for the benefit of our region. Because the Community Foundation maintains these funds as an endowment, the investment management concepts contained within Connecticut law, such as the Uniform Prudent Management of Institutional Funds Act and the Uniform Prudent Investors Act, form the basis of our investment philosophy.

The Community Foundation’s primary long-term investment goal is the generation of maximum total returns on its assets within levels of risk determined to be prudent by the Foundation’s Investment Committee. Such investment is designed to achieve the total return (income plus capital change) necessary at minimum to preserve the principal of the funds after any additions and after deductions for expenses, inflation and the distributable amounts prescribed by the spending policy of the Foundation, referenced in the following section. Ideally, the Committee seeks to achieve net returns for its portfolio greater than those of a composite benchmark comprised of those indices identified by the Committee as most appropriate.


Spending Policy

Generally, and in the absence of an institution’s desire to retain the right to withdraw principal from its organization endowment within the meaning of financial accounting standard No. 136 under Generally Accepted Accounting Principles, the process for distributing financial resources from endowment funds to meet the charitable needs of our community is accomplished through a Spending Rule Policy as follows:

The Foundation shall apply a Spending Rate, which is determined annually by the Board of Directors, currently established for 2009 at 5.75% (ceiling), 5.25% (target), and 4.25% (floor) of the market valuation of the endowment assets based on a rolling three-year average. The recommended 2009 spending allowance for grants is 4.00% and 2.9% for scholarships.


Diversification and Asset Allocation

Diversification of investments is one of the Committee’s primary strategies for fulfilling the Foundation’s responsibilities. Since the selection and weighting of asset classes greatly determines investment return and volatility, a long-term asset allocation model is established and regularly monitored by the Investment Committee.


The Foundation’s long-term asset allocation model is as follows:

As you can see from the chart above, each asset class has a target allocation and an operating range. Temporary changes to the model's target allocations are tactical in nature and depend on asset class valuations and current economic conditions. The operating range allows for shifts or adjustments to the target allocations as is deemed prudent.  


External investment managers are selected to represent the various asset classes within the model.  Our current investment manager listing is as follows:

¹ T.I.F.F. = The Investment Fund for Foundations, a non-profit organization whose mission is to assist the investment management processes for non-profit organizations.

² Fund of Funds Strategy

³ Three separate funds: III, V, and International II

⁴ Direct

The performance of these managers is measured on a regular basis by an independent consultant, Colonial Consulting, L.L.C., a New York-based firm that provides evaluation and advisory services to more than 70 foundations and endowments nationally.


Governance of Investment Process

The Foundation’s Board of Directors annually appoints an Investment Committee, not necessarily from the Foundation’s own membership, which shall be responsible for complete oversight of the investment of the charitable assets entrusted to the Foundation.  In concert with the professional staff, the Foundation’s Investment Committee may engage consultants as necessary or desirable to discharge its duties, and shall report such results, activities and actions to the Foundation’s Board of Directors, our donors and the general public via the mail or the Foundation’s website at regular intervals.


Investment Committee: Community Foundation of Northwest Connecticut

1)    Mrs. Barbara Millar, former Vice President of Northern Trust International Bank and former Vice President of Citigroup with positions held in liability management, multi-national and commercial real estate lending;

2)    Mr. Keith Mullins, Greenwoods Capital, LLC, former Head of EIB Technology Group Schroder Salomon Smith Barney Europe and former Managing Director Salomon Smith Barney, NY.;

3)    Mr. Robert Geiger, former general partner at Stolberg Partners, a $170 million middle market private equity fund and former Vice President for Nashua Corporation;

4)    Ms. Stacie Weiner, CFP, investment consultant, A.G. Edwards & Sons, Farmington office, former Vice President at Chemical Bank, now called JP Morgan Chase and former Vice President at the United States Trust Company of New York (both in New York City);

5)    Mr. James A. Thibault, MBA, AWMA Managing Partner Barron Financial Group, LLP;

6)    Mr. Timothy Goss, Treasurer, O & G Industries, Inc;

7)    Mr. Brian McCormick, Esq., Community Foundation of Northwest CT Board Liaison; Partner, Ebersol & McCormick LLC.;

8)    Mr. Jim Garfield, former Vice President and Senior Trust Officer, Bank of Boston, former Executive Director, Torrington Area Foundation for Public Giving.


Foundation Investment Performance (net of fees)

The Community Foundation is pleased to report that the Foundation's portfolio continues to out-perform the benchmarks established to gauge the overall effectiveness of our investment manager pool. The 13-year net annual return ending 12/31/07 is 10.47%. It is important to note that although the Foundation was established in trust format in 1969 as the Torrington Area Foundation for Public Giving, a majority of our assets are now invested with our corporate entity, The Community Foundation of Northwest Connecticut. All new funds, unless otherwise directed by the fund-holder, are created in corporate form.
Because our strategic investment partnership with the Community Foundation for Greater New Haven (CFGNH) will influence the returns of the Community Foundation of Northwest Connecticut, we have listed investment returns for both Foundations below. Going forward, the investment returns of The Community Foundation of Northwest Connecticut (CFNWCT) will mirror those of New Haven.

Net Average Return (net of fees)

Year        CFGNH Corp.    CFNWCT Corp.
2003        25.0%            15.70%
2004        13.1%            10.91%
2005          7.6%              7.82%
2006        16.0%            12.35%
2007        10.1%              7.92%