Board of Trustees, Endowment Fund of the ELCA
October 18-19, 2012
March 22-23, 2012 minutes – Page 1
Exhibit A
EVANGELICAL LUTHERAN CHURCH IN AMERICA
BOARD OF TRUSTEES OF THE
ENDOWMENT FUND OF THE ELCA
MINUTES
The Lutheran Center, Chicago, Illinois
March 22-23, 2012
THURSDAY, MARCH 22, 2012
ORIENTATION
Members of the Board of Trustees participated between 1:00 p.m. and 5:00 p.m. in an orientation
session, geared not only for three new members of the board but also as review for the
continuing members.
DINNER
Members of the Board of Trustees and ELCA staff met for dinner at 5:30 p.m. at Carlucci
restaurant, Rosemont, Illinois.
FRIDAY, MARCH 23, 2012
CALL TO ORDER
The meeting was called to order at 8:02 a.m. by John Saeger, chair, in the Church Council Room,
11th floor, Lutheran Center, Chicago, Illinois.
OPENING PRAYER
Kathleen Rehl led with opening prayer.
Board of Trustees, Endowment Fund of the ELCA
October 18-19, 2012
March 22-23, 2012 minutes – Page 2
Exhibit A
ROLL CALL
Trustees
John Bauder*
Pr. Charles A. Berdahl
Kelly Dean Brende
Teresa Chow
Pr. Susan J. Crowell, Vice Chair*
David W. Heise
Kathleen M. Rehl, Secretary*
John H. Saeger, Chair*
James E. Willis
*Executive Committee
Advisory Members
Pr. Linda O. Norman, Treasurer of the ELCA
Pr. William E. Rindy, Bishop, Eastern North Dakota Synod
Resource People
P. Tim Kaspar, Senior Investment Analyst, ELCA Board of Pensions, d/b/a
Portico Benefit Services
Kurt Kreienbrink, Senior Analyst, Corporate Social Responsibility, ELCA Board
of Pensions, d/b/a Portico Benefit Services
Stuart Miller, Audit Engagement Partner, Crowe Horwath LLP
Brian Zygmunt, Senior Manager, Crowe Horwath LLP
Staff
Christina Jackson-Skelton, Executive Director, Mission Advancement and
President, Endowment Fund of the ELCA
Annette Shoemaker, Director, ELCA Foundation, Mission Advancement
Dennis Prikkel, Associate Director, ELCA Foundation, Mission Advancement
Pr. Keith T. Nelson, Associate Director for Gift Planning, ELCA Foundation,
Mission Advancement
Dennis Prikkel, Associate Director, ELCA Foundation, Mission Advancement
Reva Hardina, Marketing Manager, Mission Advancement
Abiola Bankole-Hameed, Controller, Office of the Treasurer
Bob Benson, Director, Investments, Office of the Treasurer
Diane Snopek, Manager, Endowment and Gift Annuity Accounting, Office of the
Treasurer
Bonalynn Wallach, Manager, Investments, Office of the Treasurer
Bob Benson, Director, Investments and Asset Management, Office of the
Treasurer
Board of Trustees, Endowment Fund of the ELCA
October 18-19, 2012
March 22-23, 2012 minutes – Page 3
Exhibit A
Laura L. Knitt, Director, Legal/Regulatory Compliance and Assistant General
Counsel, Office of the Secretary and Assistant Secretary, Endowment
Fund of the ELCA
INTRODUCTIONS
Each attendee introduced him/herself and described a current highlight in life.
ADOPTION OF AGENDA
MOTION:
VOTED:
EF.12.3.01
to move to adopt the agenda as presented and grant the chair authority to
call items out of sequence as may be necessary. The motion was
seconded.
to adopt the agenda as presented and grant the chair authority to call
items out of sequence as may be necessary.
ADOPTION OF MINUTES (Exhibit A, Parts 1-2)
MOTION:
VOTED:
EF.12.3.02
MOTION:
VOTED:
EF.12.3.03
to move to approve the minutes of the October 11, 2011 meeting. The
motion was seconded.
to approve the minutes of the October 11, 2011 meeting.
to move to approve the November 29, 2011 Executive Committee
minutes. The motion was seconded.
to approve the November 29, 2011 Executive Committee minutes.
REPORT OF THE PRESIDENT (Exhibit B)
At 8:11 a.m. Christina Jackson-Skelton proposed that the Investment Management
Responsibility matrix be expanded to include other work of the Board of Trustees of the
Endowment Fund of the ELCA. She also proposed that an executive session be held to talk about
how to establish a process to evaluate the Administrator. She then thanked the trustees for their
promotion of gifts and endowments, and she encouraged them to be Kalos members.
Board of Trustees, Endowment Fund of the ELCA
October 18-19, 2012
March 22-23, 2012 minutes – Page 4
Exhibit A
As she talked through her written report, Ms. Jackson-Skelton highlighted Endowment Fund
Pooled Trust and general endowment fund marketing pieces: one sheet, quarter performance
report, brochure, and How To Create a Mission Endowment Fund booklet. She described
operational support provided by various parts of the churchwide organization, noting that there
are 950,000 records in the ECIS database. Looking ahead at Mission Advancement staffing, Pr.
Keith Nelson will retired at the end of July 2012, and candidates are being sought for the
following positions: Regional Gift Planner (four positions covering Western North Dakota,
Region 1, Iowa, and Illinois); Director, Planned Gifts; and Director, Major Gifts. Staff are using
technology for internal and external communication (skype, webinars, facebook), and outside
consultants for website content. Overall, there is progress in identifying potential new
Endowment Fund Pooled Trust participants.
John Bauder commented that until he sat on the board of Lutheran Social Services of Florida,
that organization did not know about the Endowment Fund Pooled Trust.
Charles Berdahl added that gift cultivation is key to growing endowment investments.
John Saeger asked for status of the ELCA Fund for Leaders program. Christina Jackson-Skelton
shared that the strategy for growth is focused on individuals who show strong giving capacity
and commitment to developing leaders.
MOTION:
to move to adopt the report of the president. The motion was seconded.
VOTED:
EF.12.3.04
to adopt the report of the president.
REPORT OF THE TREASURER
At 8:45 a.m. Pr. Linda Norman began her report by describing the Endowment Fund Pooled
Trust’s trend toward increasing participation in terms of the number of accounts. As of
December 31, 2011, of 1,872 accounts 905 are held by the churchwide organization and 967 are
those of investor participants. Another highlight is that accounting and information technology
staff have completed migration to a new endowment administration system, and distributions
were made from the new system in December 2011. Staff are working on a second phase of
conversion that includes creating new system reports and online reporting enhancements.
MOTION:
to move to adopt the report of the treasurer. The motion was seconded.
VOTED:
EF.12.3.05
to adopt the report of the treasurer.
Board of Trustees, Endowment Fund of the ELCA
October 18-19, 2012
March 22-23, 2012 minutes – Page 5
Exhibit A
INVESTMENT REVIEW (Exhibit F, Part 1)
At 9:05 a.m. Tim Kaspar of Portico Benefit Services provided a February 29, 2012 version of the
Investment Review of Endowment Fund Pooled Trust Fund A. As he highlighted portions of the
report, his key message was that market concerns are shifting from global issues to U.S.
improvement. Investment grade fixed income investments are paying historically low rates.
Benchmarks are difficult to determine; we need to exercise caution in comparing benchmarks to
actual results. High yield bond highlights are that at the end of February Portico staff presented
ideas to Portico’s investment committee about strategy. Any changes could be as simple as
changing a benchmark. Portico had significant investment manager changes in 2011, and
currently the managers for global real estate and high yield bonds are under review.
John Bauder asked why investments have not achieved 35bp over benchmark. Tim reflected that
over the past 1-2 years U.S. equity return has lagged, but Portico is confident that significant
manager changes will get returns back on track.
MOTION:
VOTED:
EF.12.3.06
to move to receive investment review information. The motion was
seconded.
to receive investment review information.
DISTRIBUTION RATE RECOMMENDATION (Exhibit G, Parts 1-2)
Bonalynn Wallach began by declaring that for 2013 Endowment Fund and Portico staff are
recommending no change from the 4.25% distribution rate. The primary objective of the policy
statement is that maintaining real distributions should have at least a 50% probability. Based on
qualitative and quantitative analysis the distribution rate is sustainable. Market value
maintenance is currently considered less of an issue than in the past. Probability simulations are
provided for reference.
James Willis moved that the distribution rate be increased from 4.25% to 4.5% to benefit
ministry for 2013, but the motion was defeated. In discussion of the motion, John Bauder
expressed that he is not in favor of such a change, because he does not know of a compelling
reason to not listen to professional advice. He further expressed that moving to a higher
distribution rate might be effective in the short term but is probably not sustainable in the long
term and that the current rate of 4.25% is already a bit risky in that it is on the high end of the
range that is prudent. Trustees agreed that this is a discussion that can continue in October, as
some members of the board would like to move the distribution rate in the direction of mission
as opposed to fiduciary responsibility.
MOTION:
to move to affirm 4.25% as the distribution rate for 2013. The motion was
seconded.
Board of Trustees, Endowment Fund of the ELCA
October 18-19, 2012
March 22-23, 2012 minutes – Page 6
Exhibit A
VOTED:
EF.12.3.07
to affirm 4.25% as the distribution rate for 2013.
BREAK
The trustees took a break at 10:00 a.m. and reconvened at 10:25 a.m.
AUDITED FINANCIAL STATEMENTS (Exhibit D, Parts 1-2)
Abiola Bankole-Hameed handed out and talked through a March 22, 2012 version of the audited
Financial Statements for December 31, 2011 and 2010, along with the management
representation letter.
MOTION:
VOTED:
EF.12.3.08
to move to receive the controller’s report of the Financial Statements for
years ending December 31, 2011 and 2010. The motion was seconded.
to receive the controller’s report of the Financial Statements for years
ending December 31, 2011 and 2010.
EXTERNAL AUDIT PROCESS AND RESULTS (Exhibit E, Parts 1-2)
Stuart Miller, Crowe Horwath LLP, stated that the auditor has an unqualified opinion. Things to
look at are fair value and increased disclosure. There are no audit adjustments and no waived
adjustments. Also, there are no changes in significant accounting policies.
Brian Zymunt, Crowe Howath LLP, added that they have not issued a formal management letter
(SAS 115) this year. The following are characterized as deficiencies that do not rise to the level
of a written management letter but that they want to share with trustees:
1) Raiser’s Edge database access. With sunset of the Raiser’s Edge database, it is no longer
used for processing receipts. A review of access data found no inappropriate access.
2) General ledger access to initiate and post journal entries. Eight individuals had a level of
access that included the Endowment Fund Pooled Trust. Tests showed back-end manual
sign-off controls.
3) System password requirements (Novell eDirectory, Trust Processor, ECIS and IFAS). Novell
is being sunsetted as ELCA moves to Windows.
MOTION:
VOTED:
EF.12.3.09
to move to receive the report of the external auditor. The motion was
seconded.
to receive the report of the external auditor.
Board of Trustees, Endowment Fund of the ELCA
October 18-19, 2012
March 22-23, 2012 minutes – Page 7
Exhibit A
MOTION:
VOTED:
EF.12.3.10
to move to recommend to the ELCA Audit Committee approval of the
Financial Statements for years ending December 31, 2011 and 2010. The
motion was seconded.
to recommend to the ELCA Audit Committee approval of the Financial
Statements for years ending December 31, 2011 and 2010.
PROXY VOTING GUIDELINES (Exhibit H, Parts 1-4)
At 11:07 a.m. Kurt Kreienbrink, Portico Benefit Services, reviewed Proxy Voting Guidelines,
Implementation and Results. Portico’s vendor is Glass Lewis. Current status of specific
shareholder resolutions and topics is available on Portico’s web site.
When asked about sustainability, Mr. Kreienbrink described three aspects: 1) environmental
impacts (e.g., the extent that companies are disclosing what they are doing and whether they are
being proactive); 2) social (e.g., treatment of employees); and 3) governance.
When asked whether the new name, Portico Benefit Services, is intended for providing services
to other nonprofits, Mr. Kreienbrink answered that the although the focus is on ELCA ministries,
a continuing resolution of the ELCA Church Council allows for the Board of Pensions (i.e.,
Portico Benefit Services) to manage and operate pension and other benefits programs for other
organizations operated exclusively for religious purposes.
When asked if social purpose investing was a cause for lagging benchmarks among the asset
classes, Mr. Kreienbrink responded that it contributes in the short term.
MOTION:
VOTED:
EF.12.3.11
to move to receive as information the report on proxy voting. The motion
was seconded.
to receive as information the report on proxy voting.
ENDOWMENT FUND RESOLUTION (Exhibit I)
Pr. Linda Norman reviewed information about the Inter-Lutheran Coordinating Committee
Scholarship Fund that has an ELCA portion of approximately $150,000. She proposed that the
fund be renamed the Give Something Back Scholarship Fund, that the Executive Director for
Congregation and Synodical Mission have ability to choose whether to receive or reinvest
quarterly distributions, and that distributions and additional expenditures from the fund be used
for the expressed purpose of supporting clinical pastoral education students as they pursue this
addition to their ministry.
Board of Trustees, Endowment Fund of the ELCA
October 18-19, 2012
March 22-23, 2012 minutes – Page 8
Exhibit A
MOTION:
VOTED:
EF.12.3.12
to move to authorize a change of the name of the Inter-Lutheran
Coordinating Committee Scholarship Fund to Give Something Back
Scholarship Fund; authorize that an election to receive or reinvest the
quarterly distribution may be made upon the written request of the
Executive Director for Congregation and Synodical Mission in
consultation with the Executive for Administration, allowing that
additional expenditures from the Fund may be made upon the written
request of the Executive Director for Congregation and Synodical
Mission in consultation with the Executive for Administration; and
authorize that distributions and additional expenditures from the Fund be
used for the expressed purposed of supporting clinical pastoral education
students as they pursue this addition to their ministry. The motion was
seconded.
to authorize a change of the name of the Inter-Lutheran Coordinating
Committee Scholarship Fund to Give Something Back Scholarship Fund;
authorize that an election to receive or reinvest the quarterly distribution
may be made upon the written request of the Executive Director for
Congregation and Synodical Mission in consultation with the Executive
for Administration, allowing that additional expenditures from the Fund
may be made upon the written request of the Executive Director for
Congregation and Synodical Mission in consultation with the Executive
for Administration; and authorize that distributions and additional
expenditures from the Fund be used for the expressed purposed of
supporting clinical pastoral education students as they pursue this
addition to their ministry.
REPORT OF THE CHAIR
John Saeger relayed compliments from the Board of Trustees to the president and staff regarding
the meeting format, smoothness, information, etc. He further offered that trustees are willing to
serve staff and asked what trustees can do to help staff. He then thanked Pr. Keith Nelson for his
service and wished Pr. Nelson well in his retirement. Before bringing the regular session of the
meeting to a close, Mr. Saeger summarized results of the survey from the October 2011 meeting
(Exhibit J) and requested that today’s surveys be completed.
EXECUTIVE SESSION
At 12:00 p.m. the trustees adjourned for executive session to discuss a process for evaluation of
the Administrator.
Board of Trustees, Endowment Fund of the ELCA
October 18-19, 2012
March 22-23, 2012 minutes – Page 9
Exhibit A
FUTURE MEETING DATES


October 18, 2012 (dinner) and October 19, 2012 (8:00 a.m.-5:00 p.m.) – Lutheran Center
March 14, 2013 (dinner) and March 15, 2013 (8:00 a.m.-5:00 p.m.) – Lutheran Center