First Presbyterian Church Endowment

Investment Policy Statement

Purpose and Scope

To establish the mission guidelines, investment, and spending objectives for the First Presbyterian Church Endowment (FPC Endowment). To serve as a supporting document of the First Presbyterian Church of Hartsville Endowment Fund Agreement (FPC Endowment Agreement).

Mission and Financial Objective

The primary mission of the Endowment is to expand and enrich the mission and ministry of the FPC congregation, as stated specifically in the FPC Endowment Agreement to include the following areas: Outreach Missions and Service, Worship and Music, Christian Education, and unusual repairs and maintenance of church property.

The financial objective of the FPC Endowment is to support an annual distribution, not to exceed 4%, while also preserving and growing investment principal to therefore protect long-term purchasing power.

The FPC Endowment is intended to be a perpetual fund that will serve as a financial support for First Presbyterian Church Hartsville for generations. It is the responsibility of all parties involved in leadership and governance to recognize and act accordingly as stewards of this time horizon.

Investment Guidelines

The investment portfolio will reflect a diversified strategy that targets a moderate risk tolerance profile with a primary objective of income and a secondary objective of moderate growth. The growth component of the financial goal is solely for the purpose of preserving purchasing power, as it is recognized that in order to grow the annual income stream in keeping with inflation over time, the principal value of the account must grow.

Asset allocation of the Fund should reflect the proper balance for liquidity, preservation of purchasing power net of distributions, and a moderate risk tolerance. The portfolio will be invested in equities, fixed income, and cash equivalents based upon an acceptable asset mix that may allow for market participation in growth areas while protecting downside risk. Alternative asset classes that comply with the appropriate moderate risk tolerance may also be considered. Asset allocation specifics should be assessed and rebalanced on an annual basis and should be consistent with a dynamic roles-based policy that adheres to the income and moderate growth objectives. Investment allocations will not include private placements, restricted stock, illiquid securities, uncovered options, arbitrage, marginable trades, or any unregulated securities. Investment choices will be mindful of and reflect our Christian values.

A reasonable measurement of the success of the investment goal will be based on a rolling 3-to-5-year portfolio annualized total return.

Spending Guidelines

Annual distributions, not to exceed 4% per year, will be calculated once per year and based on the account value as of the September (?) statement. Requests for use of Endowment Fund assets must be submitted in writing to the Endowment Committee. This body will review requests, then recommend to Session items for a final vote of approval. This process will take place during the regular annual budget planning of the Church.

After the approval of requests, invested assets will be liquidated and held in cash until the appropriate time for distribution to fund a request.

If requests in a given year are less than 4% of the FPC Endowment balance, the unused funds from that year may be liquidated and held in a cash account to carry over and be used in a future calendar year. Such funds are only to be used for the purpose of approved FPC Endowment use only.

It is stated in the Endowment Fund Agreement that a distribution should not be made if it would cause the Fund account to dip below $1,000,000. No distributions will be made until the Fund reaches a balance of $1,040,000 to support this goal.

Definition of Duties

Session: The Session has ultimate responsibility for ensuring the financial stability of the church and is the governing body that will delegate authority of ongoing investment due diligence to the Endowment Committee.

Endowment Committee: The Committee shall consist of eight members. The Pastor, Clerk of the Session, and Treasurer shall be ex-officio members. The remaining five members shall be the four Trustees and two members at large appointed by the Session. At least one of these five members shall be a current member of the Session at the time of appointment and all members must be currently active members of the Church.

The Committee will be responsible for approving investment strategy, hiring investment advisors, and monitoring investment performance. The Committee will be responsible for reviewing requests and making distribution recommendations to the Session. The Committee will present an annual report of the preceding year to the Session no later than its March meeting.

Financial Director of the Church: The church’s Financial Director will be responsible for record keeping and reconciliation of deposits and distributions of assets of the FPC Endowment, as well as reporting of records to the Endowment Committee and the Session on a regular basis. All correspondence of statements and notices from the investment advisor will be mailed to the attention of the church’s Financial Director.

Investment Advisors and Portfolio Managers: The investments of the Endowment will be held in a brokerage account with an outside financial institution. The responsibilities of this account custodian include safeguarding of the assets of the FPC Endowment portfolio, recommending and implementing an investment strategy, routine review of and communication of account performance net of fees with the Endowment Committee and to Session upon request, advising and providing education to the Committee of current market environments as they relate to the achievement of the long term investment objective, providing monthly and annual account activity reports, settlement of securities bought and sold, collecting dividend and interest payments, maintaining the proper risk avoidance and annual review of risk tolerance, managing deposits and distributions, liquidating gifted in-kind securities upon deposit, properly allocating liquid funds into the investment strategy, and other general services.

The Investment Advisor is responsible for serving in a comprehensive role of advisement with the fiduciary responsibility of working in the best interest of this church to keep the fiscal well-being of the church as the foremost goal of every investment recommendation.

Assets of the fund are to be invested with the care, shill, and due diligence of a prudent investor.