Investment Policy

Pennsylvania Kiwanis Foundation Investment Policies

Preamble

It is the policy of the Board of Directors (Board) to treat all assets of the Pennsylvania Kiwanis Foundation (PKF), including Funds that are legally unrestricted, as if held by PKF in a fiduciary capacity for the sake of accomplishing its mission and purposes. The following investment objectives and directions are to be judged and understood in light of that overall sense of stewardship. In that regard, the basic investment standards shall be those of a prudent investor as articulated in applicable state laws.

Investment Assets

For purposes of these policies, investment assets are those assets of PKF that are available for investment in the public securities markets as stocks, bonds, cash, or cash equivalents, either directly or through intermediate structures.

Supervision and Delegation

The Board of Directors of PKF has adopted these policies and has formed an Investment Committee, described below, to whom it has delegated authority to supervise PKF investments. The Board reserves to itself the exclusive right to amend or revise these policies.

Investment Committee

The Investment Committee (Committee) shall consist of Board members duly appointed by the Board who serve at the pleasure of the Board.

1. Monitor and evaluate the investment performance of the PKF’s funds;
2. Report regularly on PKF investment matters to the Board of Directors;
3. Execute such other duties as may be delegated by the Board of Directors.

The Board is specifically authorized to retain one or more investment advisors (Advisors) or other investment service providers required for the proper management of PKF’s funds. The Board may utilize an Advisor as an investment consultant (the “Consultant”) to advise and assist the Committee in the discharge of its duties and responsibilities. In that regard, a Consultant may help the Committee to:

1. Develop and maintain investment policy, asset allocation strategies, risk-based fund objectives, and appropriate investment management structures;
2. Provide and/or review quarterly performance measurement reports and assist the Committee in interpreting the results;
3. Review portfolios and recommend actions, as needed, to maintain proper asset allocations and investment strategies for the objectives of each fund; and, Execute such other duties as may be mutually agreed.

In discharging this authority, the Committee can act in the place and stead of the Board and may receive reports from, pay compensation to, enter into agreements with, and delegate discretionary investment authority to such Advisors.

Objectives

PKF’s primary investment objective is to preserve and protect its assets, by earning a total return for each category of assets (a “Fund”), which is appropriate for each Fund’s time horizon, distribution requirements, and risk tolerance. These policies apply to all PKF Funds, although the specific objectives, risk parameters, and asset allocation will vary, as appropriate, from Fund to Fund.

Asset Allocations

The Asset Allocation for the PKF Fund be established and maintained by PKF on the advice of its Consultant and/or Advisors, within the ranges provided.

1. The Stock/Bond mix will be 65% stock +/- 5%, 35% bonds +/- 5%.
2. The guideline maximum amount in any one fund shall not exceed 15% of the portfolio.
3. The portfolio may contain foreign stocks not to exceed 15% of the portfolio +/- 5%.
4. The portfolio may hold international bonds not to exceed a guideline maximum of 10% of the portfolio.
5. The investment advisor may buy individual corporate bonds. The individual bonds must be rated BAA1/BBB+ (Moodys/S&P). Bond maturities shall not exceed five years unless approved by the PKF Board.

Rebalancing Procedures

The Committee will monitor the asset allocation of each Fund based on reports provided by PKF’s Consultant and/or Investment Advisors. The Committee may establish any reasonable rebalancing procedure based on either periodic reviews or departures from a range and may use its discretion to determine the timing of rebalancing actions. To achieve rebalancing, PKF may either move money from one asset class to another or may direct future contributions to and expenditures from particular classes as is most convenient. At a minimum, the portfolio will be rebalanced at least once per year.

When utilizing mutual funds or other commingle entities the Committee shall see that the Consultant and/or Investment Advisors have selected the investment entity appropriately based on the strategies and provisions contained in the entity’s prospectus. In that event, the terms and conditions of the prospectus are deemed to control the entity’s internal asset allocation, asset quality, diversification, and other requirements.

For purposes of these investment policies, all private (non-publicly traded) investments and all investments prohibited under the Risk-Based Restrictions, below, will be considered Alternative Investments. Alternative Investments may only be used with the approval of the Investment Committee granted in accordance with the exception processes described below.

Tax-Based Restrictions

PKF is a charitable organization under 501(c)(3) of the Internal Revenue Code. Consequently, its income is generally exempt from federal and state income tax with the exception of income that constitutes Unrelated Business Taxable Income (UBTI). Since UBTI can be generated by leveraged investments (resulting in “debt-financed income”), PKF will not utilize margin, short selling, or other leveraged investment strategies unless the Investment Committee grants a specific exception.

Risk-Based Restrictions

PKF will not engage in commodities transactions or option strategies (puts, calls, straddles) nor will it invest in any non-publicly traded securities including but not limited to managed futures funds, hedge funds, private equity funds, or other alternative investments unless approved by the Committee.

Exceptions to the Investment Restrictions

The Board recognizes the evolving nature of the investment world and that, under some circumstances, PKF may wish to utilize newer or more complex investment strategies. Therefore, the Investment Board is authorized to grant exceptions to the foregoing restrictions. For tax-based restrictions, the Committee is to determine if a particular strategy or investment will generate UBTI, for which it may rely on advice of counsel.

When granting exceptions to the Risk-Based restrictions or otherwise approving Alternative Investments, the Committee must determine that the potential rewards outweigh the incremental risks and the Committee, or the Committee’s retained investment consultant, must complete the additional Alternative Investment Due Diligence described in the exhibit to these policies. All such exceptions shall be made in writing and shall be communicated to the Board as part of the next regular Investment Committee report.

Custody and Securities Brokerage

The Committee will establish such custodial and brokerage relationships as are necessary for the efficient management of PKF’s Funds. Whenever the Committee has not designated a brokerage relationship, the PKF Investment Advisors may execute transactions wherever they can obtain best price and execution.

Reporting Requirements

1. Once monthly the Treasurer will receive a written custodial statement.
2. The Committee will obtain from the Consultant/Investment Advisors a detailed review of PKF’s investment performance for the proceeding quarter and for longer trailing periods as appropriate.
3. On a quarterly basis the Committee will receive an up-to-date report showing quarter end allocation of assets between equities, fixed income securities and cash.
4. Periodically – The Committee should meet with its Investment Consultant at least annually to review all aspects of PKF’s investment assets. Such a review should include (1) strategic asset allocation, (2) manager and investment entity performance, (3) anticipated additions to or withdrawals from Funds, (4) future investment strategies, and (5) and other matters of interest to the Committee.

This Investment Policy is duly adopted by the PKF Board of Directors at it’s meeting October 17, 2009.

PKF Mailing Address

The PKF mailing address is:

Pennsylvania Kiwanis Foundation
2793 Old Post Road Ste 12
Harrisburg, PA  17110-9311

Mission Statement

2011-2012 PKF Board