wfn.org | Foundation strategies emphasize reassurance for donors and investors

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Note #6304 from PCUSA NEWS to PRESBYNEWS:

13-December-2000
00448

Foundation strategies emphasize reassurance for donors and investors

by Jan Walther Hamblen
PC(U.S.A.) Foundation

Editor's note: The Presbyterian News Service has agreed to publish the
following statement by the Presbyterian Church (U.S.A.) Foundation to ensure
its widest possible circulation. — Jerry L. Van Marter

JEFFERSONVILLE, Ind. -- The headline from the Nov. 22 Wall Street Journal
reads  "Parishioners Sue Over Losses From Risky Investments By Lutheran
Foundation."  The article chronicles the failed investment performance of
funds managed by the Lutheran Church - Missouri Synod Foundation, including
church funds and life income plans that have "gone bust." Why?  The
Missouri-Synod Lutheran Foundation placed 40% of its bond portfolio in risky
"stripped" mortgage-backed securities, which became valueless when interest
rates dropped. The Journal reports "the imbroglio has become an object
lesson for conservative institutions that, like mutual funds taunted by the
dot-com returns, feel pressured to beat the markets.  The results can be
disastrous for churches..."

	This latest headline and the Arizona Baptist scandal several years ago
validate the Presbyterian Church (U.S.A.) Foundation's decision to
voluntarily submit to regulatory oversight by the Office of the Comptroller
of the Currency (OCC) and other agencies by the development of New Covenant
Trust Company, N.A. (NCTC).

	A subsidiary of the Foundation, NCTC is a federally chartered, national
trust bank that provides certain advisory services previously offered by the
Foundation directly.  NCTC accounts receive extensive scrutiny by the OCC. 
In fact, just last week the OCC completed a four-week exam by six examiners.
 This rigorous exam is equal to those conducted for other national trust
banks.

	According to the article, the Lutherans have recently restructured their
investments to be managed by professional outside managers as a response to
the crisis.  Their new strategy patterns the approach that the Presbyterian
Foundation has followed for decades and continues to follow through its
investment services.  The Foundation has selected a portfolio of equity and
fixed-income investment management firms with different styles and
investment objectives.  Through this structure, the Presbyterian Foundation
is able to deliver a higher degree of balance, accountability,
diversification, and sophistication than would otherwise be beyond the reach
of most congregations.

	The Presbyterian Church (U.S.A.) Foundation has long taken its fiduciary
responsibilities seriously.  Our conservative approach to the investment of
the assets we hold -- assets that are vital to the growth and mission of the
Presbyterian Church (U.S.A.) -- has always guided our management of the
Church's money.  The pressure to outperform the market has led many
organizations to take extraordinary risks in order to compete and to meet
the aggressive expectations of investors and donors.  With ongoing
competition to produce high rates, the overall objective of capital
appreciation is sometimes lost in the push for higher returns.  The
Foundation's long-standing strategy has been to invest for the long term,
since the largest class of investments is endowments for perpetuity.  The
mission and ministry of the Presbyterian Church (U.S.A) are foremost in our
overall philosophy.

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