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High Point funder responds to downturn

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Jan Samet

Jan Samet

Todd Cohen

HIGH POINT, N.C. — As the recession loomed last year, the High Point Community Foundation took steps to adapt.

In the third quarter of 2008, following the advice of its investment manager that it pursue a more conservative and defensive strategy in the face of the volatile capital markets, the foundation shifted a bigger share of its investments to cash and cash equivalents such as money-market and checking accounts.

The strategy paid off: In the first five months of 2009, the foundation generated a return of over six percent on its assets, compared to a loss of nearly 30 percent in 2008.

“We’ve been pleased with our year-to-date performance,” particularly because cash accounts represented nearly 7.5 percent of the foundation’s more than $40 million in assets, says A.B. Henley, chair of the foundation board’s investment committee and a broker at Triad Commercial Properties.

The credit for those investment returns, Henley says, goes to Calibre, a unit of Wachovia, now Wells Fargo, that serves as the foundation’s investment manager, and to the foundation’s decision to allocate more of its assets to investments in growth stocks rather than value stocks.

Calibre, which among other things selects and tracks the performance of roughly 20 money managers for the foundation, makes sure each manager does not drift from the type of investment, such as mid-cap value equity, it was hired to make, Henley says.

Still, despite the positive return, the value of the foundation’s assets has declined to less than $45 million, compared to less than $55 million a year ago.

So the foundation has cut its operating budget by 20 percent, including the reduction in its staff to three employees from four, says Dan Odom, a partner in CPA firm Odom & Co. who serves as the foundation’s treasurer.

Cuts have included spending for travel and training, Odom says, and likely will include a salary freeze for the fiscal year that begins July 1.

“We’re just looking at every area that can reduce expenses,” he says.”

Jan Samet, a partner in the law firm Keziah, Gates & Samet who chairs the foundation board’s grants committee, says the loss in the value of its assets means the foundation will be making fewer grants from its unrestricted assets.

Last year, the foundation distributed nearly $355,000 in unrestricted funds, representing roughly 10 percent of all giving by the foundation.

The remainder, or roughly 90 percent of over $4 million the foundation distributed, represented funds for which donors designated a specific purpose.

“We anticipate there’s going to be less money,” Samet says. “It’s almost a moral certainty we will have to reduce.”

He says the foundation will make grants only from income earned on investments and will not dip into its unrestricted principal.

“That cannot be allowed because the donors will lose faith in what we’re doing,” he says. “It’s close to blasphemy.”

Grants for capital projects likely will be “very limited,” he says, and the foundation will have less money available to support programs.

“We’re trying to prime the pump,” he says, “for new ideas and new programs addressing new issues and new members of the community.”

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