Perpetuity and patience are our bedrock

Perpetuity, long-term perspective and patience are the bedrock of the North Carolina Community Foundation’s philosophy, objective and strategy for its investment portfolio. These are even more important during periods of heightened volatility in the financial markets, such as we are currently experiencing.

Recent dramatic moves in world equity markets painfully remind us of the depths of the Great Recession in 2008. The long-term perspective served us well in 2008, and it will again in the current market dislocation.

In the 10+ years since the last downturn, the NCCF investment portfolio has returned an average of over 8% per year. This is right in line with our average annual investment return from the inception of the Foundation.

The NCCF investment objective is to achieve a return sufficient to cover annual granting, inflation and administrative fees, historically around 8%. A fitting sports analogy would be singles, not home runs.

While any discussion of investment returns must include the familiar “Past performance is not indicative of future results,” a long-term investment perspective does allow you to consider the long-term returns of different investments. Over the past 75+ years, U.S. equities have returned an average annual 10-1/2%. Diversifying investments, primarily bonds, are in the 5% range. An allocation of 65 to 70% equity should produce the desired 8% annual return. Through our investment partners, we do achieve broader diversification with other alternative investments and liquidity options.

Prudent investment stewardship is essential to our mission of building long-term charitable assets for the benefit of our constituents. The investment portfolio is overseen by the NCCF Finance Committee, a sub-committee of our statewide Board of Directors. The committee and NCCF management, with the assistance of our investment advisor, closely monitor our investment partners for adherence to investment guidelines, performance expectations and professional and ethical behavior.

As always, we remain committed to stewarding every charitable dollar entrusted to us with integrity. We are forever grateful for your commitment to North Carolina, our communities and philanthropy.