News and Updates

The Tamworth Foundation Annual Meeting

The Tamworth Foundation’s 2010 Annual Meeting on August 20th was well attended, due in part to high interest in Tamworth Wireless, an ambitious and meaningful community project funded by The Tamworth Foundation. The Treasurer’s report, written and read by David Little, gives a good overview of TTF’s financial structure and recent activities.

Annual Meeting Treasurer’s Report – August 20th, 2010

By David Little

Thank you. I am pleased to present the 73rd annual Treasurer’s Report for the Tamworth Foundation.

I’ll cover four topics in four pages: first a summary; second, receipts; third, expenditures; and fourth, allocation of grants for the coming year.

The Foundation has a quirky fiscal year end: April 30th. So this report covers the period from May 1st, 2009 to April 30th, 2010.

In round numbers:

This year’s contributions totaled $25,800. $25,844

Investment income was 71,400. $71,364

Capital Gains from investments were $615,900. $615,854

We had expenses of (30,500). ($30,464)

And distributed ($122,500) in grants. ($122,499)

We’ll cover these topics in more detail, along with 3-year comparisons, on the following pages.

The bottom line was our endowment ended the year at $3,590,517, an increase of 19%. That’s a very positive result.

Nationally, we’re still coming out of a recession. Many challenges remain. The recovery was created by government stimulus spending, which will end. Unemployment and debt levels remain high. Economically, things are shaky, at best.

Our Foundation remains stable. It’s structured to support and strengthen the community, even in turbulent times. We’re able to take a long-term view of our investments, and be flexible about ways to support both donors, and Tamworth’s Non-Profits.

Page 2 shows contributions and investment results. We’ll focus on figures for fiscal year 2010, in the far right-hand column.

Last year we received 116 contributions, totaling $25,800. While the number of donations was about the same, total dollars were down. It’s actually the lowest amount we’ve received in 10 years. Clearly, our donors are feeling the economic impacts of the recession.

Under Investment Results, dividends and interest were down, both in yield, and in dollars. Not surprising, given the stock market.

The one bright spot on the page is $615,900 of total gain, the largest increase ever, from investment returns.

Investment Analysis compares our account’s performance to industry benchmarks. Our results were below market standards in all three asset categories. We continue to have faith in the investment management provided by Cambridge Trust Company. Their goal is to do better than the market, with less risk, over the long term. Indeed, over the past five years, our results have averaged 2% better than a blend of the industry benchmarks.

The pie chart, at the bottom of the page, shows our asset allocation. The Board’s goal is to have 70% of the endowment invested in stocks. And we do. The Foundation remains committed to this long-term growth strategy. Over the last 85 years, gains from the US stock market have averaged 10% per year. We accept that higher risks come with the higher returns from such an allocation strategy.

There are two items I’d like to highlight under Contributions.

Last year, 20% of our annual fund-raising came from a new initiative: A custom gift idea like the Gift Card.

Here’s a sample. It’s answers the following questions:

* What can you get someone who has everything?
* Or when it’s the thought that counts?
* How do you reduce materialism during the holiday season?
* Where else can you make a donation to your favorite charity, and take care of all your holiday shopping, and shipping, for only 44 cents?

Here’s our offer: you send us a check, along with the names and addresses of your friends or loved ones. We’ll send them each a card, featuring this original watercolor of Tamworth village by our very own artist, with a note inside, indicating you made a contribution in their honor. You’ll get an acknowledgement of your tax deductable donation. We’ll keep the check. It’s a win-win-win situation.

These are non-denominational cards, appropriate for Christmas, birthdays, Festivus, or whatever holiday you celebrate. Remember: one size fits all. Unlimited supplies. Not void or prohibited. And there’s no minimum, or maximum, to the size of your check.

The entry Directed Gifts refers to securities we accepted for the benefit of another charity.

It’s always advantageous to make charitable donations with stocks, if you can. No one pays any capital gains tax. The charity gets the current market value, including any unrealized gains. The donor gets to deduct the full value of the gift, even though their cost was only the original basis amount.

Last year, a couple of donors were interested in contributing appreciated securities to help the Conservation Commission protect the Gilman Forest. (Yes, even in this economy, there are donors with appreciated stocks.)

Luckily, the Conservation Commission doesn’t have a brokerage account, and the Foundation does. We were able to assist these donors, and help the Conservation Commission achieve their land protection aims.

If you’re fund raising for a local non-profit in this situation, or you’re a potential donor with highly appreciated securities, have your man call our man. We’ll provide the stock transfer instructions, sell the shares on receipt, and deliver the proceeds, all at no fee.

Page 3 shows where the money went. Again, we’ll focus on fiscal year 2010 figures, in the right hand column.

Expenses, totaling $30,500, were up over the previous year, but still only 1% of assets.

Now, I never feel bad when investment management fees go up, if it means there’s more money being managed.

The other big expense, included in “Other”, was design work for our new logo and this handsome brochure. We’re making a concerted effort to increase the Foundation’s visibility.

This past year, we distributed 19 Grants totaling $122,499.

As a board, we’re proud of what we’ve accomplished. And you should be proud too, because it’s your contributions that make it possible. We couldn’t do this work without your continued support. Thank you. And we’re all indebted to the many individuals, who volunteer and work for area non-profits, apply for the grants, and whose efforts implement these terrific projects. A big “thank you” to all of them, as well.

* $69,442 went to the three restricted fund recipients: Chocorua Public Library, Runnells Memorial Hall, and Tamworth Community Nurse Association.

* We gave $3,000 to Advice to the Players for last spring’s production of Hamlet.
* And $3,000 to the Arts Council for next fall’s artist residency program at the K. A. Brett School.
* The Chocorua Community Church got $4,300 for renovations of their second floor, to meet fire/safety requirements, and create more usable space.
* The Cook Memorial Library received $500 for the “One Book, One Valley” program.
* The school’s Health and Wellness Committee was awarded $1,500 to construct a composting facility at the K A Brett School.
* We spent $1,800 on the Non-Profit Summit. We need to thank John & Michelle Cleveland, Duane Dale, and Jack Waldron, who donated their time and expertise, helping members of the Board organize that event. We couldn’t have done it without their contributions.
* We awarded TCNA two grants. $9,000 went for consulting expenses for their strategic planning. You can hear more about that, at their annual meeting, 6:30 this Wednesday, at the Brass Heart Inn.
* $376 was for replacement pads on 11 defibrillators at community non-profit locations. We should acknowledge Steve Gray, for his tireless efforts, making sure those devices stay in working order.
* Last fall the Civic News proposed an intriguing challenge grant. They were fund raising, but didn’t ask us to give them any money. Instead, they asked if we would give $10 to the Food Pantry, for every donation the Civic News received before year-end. 78 readers responded, and we gave $780 to the Food Pantry, delighted about such collaborative fund raising.
* We granted $10,271 to the Tamworth Conservation Commission for land protection efforts of the Gilman Forest. In addition to the $7,227 in directed gifts.
* We gave $3,500 to support the Junior Ski Program at K A Brett School, run by the Tamworth Outing Club.
* We awarded $5,000 to the Scholarship Committee.
* And last alphabetically, but not least, we gave Union Hall Association $2,800 to replace the roof on their building in South Tamworth. We expect to be back there next year, grateful for a roof over our heads.

Page 4, shows how we allocate amounts to distribute for the coming year.

We have four separate funds comingled in one account. This gives economies of scale that reduces overall costs, and provides consistent investment results, regardless of fund size. But it requires sub-accounting, to determine what part of the endowment belongs to each fund. Every quarter, contributions are added, disbursements subtracted, and expenses, income, and investment returns are allocated on a prorated basis. The resulting totals are used to recalculate new beneficiary allocation percentages.

Remember those per cents; we’ll use them in a moment.

A Total Return strategy means that instead of distributing income, we distribute a percent of the total endowment, every year. There are two parameters needed for these calculations: timeframe, and the percent.

If you look at the chart on page 4, the line graph that looks like a toboggan run, represents the endowment’s quarter ending values. Each bar on the graph represents the average of the previous 12 quarters. Notice how values for those last three bars are flat as a pancake, despite a million-dollar decline in fiscal year 2009.

When we looked at the pie chart back on page two, I said the Foundation accepted that volatility comes with having a large exposure to the stock market. But our beneficiaries, with their budgets, probably wouldn’t appreciate huge fluctuations in their distributions every year. Using rolling 12-quarter averages smoothes out those curves.

We use 4% to calculate distribution amounts. It’s a conservative number, that accounts for our stock market exposure, plus expenses, and still keeps ahead of inflation.

Finally, to calculate distribution figures for fiscal year 2011, we use the per cents from step 1, and the dollar amount from step 2.

And now for a word from our sponsor, about endowment funds. As a Community Foundation, one of our roles is to be a vehicle for you to achieve your philanthropic goals. Restricted funds are a powerful tool for financing your passion. Since we’re here, let’s use Runnells Hall as an example.

In 1968, Elizabeth Whittemore left $200,000 to the Foundation, for the Chocorua Public Library. There was a provision in her will, which allowed the Library Trustees use part of the principal to replace the existing building. Which they promptly did. So this building was erected for $85,000 from the Tamworth Foundation. Since then, we’ve distributed $540,700 to the Library, and their endowment is currently $491,300. So that initial $200,000 bequest has produced this building, and over one million dollars of income and endowment. Your mileage may vary, but that’s a pretty big benefit for the community.

There is a separate fund, for the benefit of Runnells Memorial Hall. In 1963, Mrs. Albert A. Jackson (the former Lucy Runnells) gave $6,100 in memory of her father, Sumner Runnells. Since then, we’ve distributed $35,800 and there’s still $28,500 of principal left.

That’s a 10-to-1 payback. With no end in sight. Past performance is no guarantee of future returns. But I’d point out, it doesn’t cost very much to start making a lasting impact.

These endowments benefit specific organizations. Alternatively, you could establish a “field of interest” fund. For example, the monies raised by the Women of Tamworth calendar sales were distributed by the Foundation, to projects benefiting children.

Now these distributions aren’t sufficient to completely support any organization. It still takes hard work by a dedicated board. But having an endowment gives a sense of permanence, and can inspire a board. The income produced, reduces fundraising they have to do, leaving more time and energy, for governance and programs.

We’d be happy to help you design a “Gift that keeps on giving” to match your interests and your financial situation. The only constraint is your objectives have to be consistent with the Foundation’s purpose, which is “to preserve and improve the spiritual, intellectual, social and physical well-being of the inhabitants of the Town of Tamworth.” And that’s a pretty broad scope.

Thank you. I’ll be happy to take your questions, or your donations.