First Presbyterian Church, Sharon PA

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Endowment Policy
First Presbyterian Church

Christian stewardship is an awareness that everything we have is a gift from God. We are absolute owners of nothing; rather, we are stewards of all we receive and we must use such resources responsibly in our life-long work of service in the Kingdom of God. Stewardship heightens an awareness of responsibilities in the matters of material concern no less than in spiritual endeavors.

OBJECTIVES:
The endowment of The First Presbyterian Church of Sharon is a vital resource which will be used to support the mission of the church. The endowment includes the Endowment Fund, which is under direct management of the Endowment Committee, and trust accounts from which income flows to the church. It is our objective that the funds be prudently and responsibly invested to achieve attractive total returns. This will enable the church to withdraw such funds as are needed to support the budget, mission projects, and other needs of the church as approved by the Board of Trustees and the Session; and still permit growth in the value of the varied accounts. We have a target of outperforming a market index based on the S&P 500 Stock Index and the Lehman Brothers Corporate/Government Bond Index. Conservation of capital is of major importance.

INVESTMENT COUNSELOR:
The church's Endowment Fund will be managed by an outside investment counselor, recommended by the Endowment Committee of the Board of Trustees, and approved with the amount to be invested by the Board of Trustees and the Session. The Investment Counselor is to be responsible for individual stock or bond selections, subject to guidance from the Endowment Committee of the Board of Trustees. This committee is to be composed of the President of the Trustees, the Treasurer, the Senior Pastor, and two additional members appointed annually by the Trustees; one of whom must be a member at large (ie. not currently on the Board of Trustees). The amount invested in equities should represent 25-75% of the total account value. At no time should the equity portion of the funds exceed 75% of the total value of the funds. It is expected that the Investment Counselor have an impeccable reputation for integrity and professionalism. It is further expected that conflicts of interest will be avoided in managing the funds. Should such a potential conflict arise, it should be communicated to the Endowment Committee at once. Fees for services and discontinuation of services shall be negotiated at the beginning of the relationship.

SPECIAL RESTRICTIONS ON INVESTMENTS:
The following additional restrictions will apply to the investment of the Endowment Fund of the church managed by the Investment Counselor and will be noted in consulting with managers of other trust funds.

Borrowing of funds or securities is not permitted.
Direct investment in real estate and commodities is not permitted.
Funds may not be invested, nor obligations incurred in futures, options, swaps, forwards, Collatoralized Mortgage Obligations, or any other financial derivatives.
Preferred equity or debt securities convertible into equity securities of the same issuer are permitted.
No more than 10% of the funds may be invested in foreign securities, including American Depository Receipts.
No more than 10% of the funds at cost may be concentrated in the securities of any one issuer (other than U.S. Government and Agency debt).
All securities shall be readily marketable, and fixed income securities shall be of investment grade.
No specific restriction is placed on portfolio turnover, though the portfolio should not be managed for short term gains or generation of fees.
The Investment Committee may further restrict security selection based on ethical investing criteria as directed by The Board of Trusees and the Session.
The funds shall be held in custody by a bank or trustee.
REVIEW AND COMMUNICATION:
The Investment Counselor is responsible for timely and regular reports; and shall be expected to prepare a quarterly report (on a calendar year basis) for review by the Endowment Committee, the Board of Trustees, and the Session. The report should summarize the funds' performance and transactions occurring during the period. It is anticipated the Investment Counselor will meet with the Endowment Committee at least annually to review the performance of the account. The counselor is responsible for communicating to the Board of Trustees through the Endowment Committee all significant matters pertaining to the investment of the funds' assets. The Board of Trustees, through the Endowment Committee shall be notified promptly regarding substantive changes in investment strategy, asset mix, and other matters affecting the investments, including any significant changes in the structure and financial condition of the investment management organization.

SPENDING PLAN:
In proposing this spending plan, we expect to be able to preserve the purchasing power of the Endowment Fund and other trusts while simultaneously providing income at the highest sustainable level. The plan is as follows:

Annually to withdraw up to 5% of the average total value of assets in the Endowment Fund over the prior twelve (12) quarters and to receive distributions from other trusts; and to allocate same funds for church uses including the Annual Operating Budget, building repairs and maintenance, and special projects.

REVIEW OF ENDOWMENT POLICY:
This statement of Endowment Policy will be reviewed at least annually by the Board of Trustees, the Session and the Endowment Committee and revised or confirmed as appropriate by the Board of Trustees and the Session.