That issue is being raised by an overture from the Synod of the Southwest, which is asking the General Assembly to alter a directive from 1986 that requires the council to invest with the foundation. Jan DeVries, the synod’s executive, argues that the foundation’s rate of return is lagging behind what’s available in the private financial market and that the council should be given the same flexibility in investing — the opportunity to go elsewhere — that other General Assembly entities already have.
The council must decide whether it wants to comment on that overture or to follow up on a suggestion from DeVries that the council and the foundation work together on what she calls a “collaborative response” they would jointly present to the assembly. Such a response would show a willingness to address the concerns the synod is raising. “There are many more options than saying yes or no to the overture,” DeVries said.
For now, the stewardship committee is recommending that Allison Seed, the council’s chair, and Reg Kuhn, the council’s liaison with the foundation, have some conversations quickly with the foundation’s leadership to see where that might take things. Seed and Kuhn then would make a recommendation to the council’s executive committee as to whether the council should weigh in on the issue, or not. The full council will consider the stewardship committee’s recommendation on April 25.
What will happen is anyone’s guess.
But the conversation in the committee April 24 did provide some clues as to what’s swirling about beneath the surface.
Some council members, for example, have concerns about the council seeming not to support the foundation if it seeks the freedom to invest elsewhere. At a time when the Presbyterian Church (U.S.A.) is fragmented, to say “we’re not going to support one of the six main agencies of the church” is a cause for concern, Kuhn said.
There was also conversation about what rate of return is reasonable to expect.
“I don’t think this committee is expecting a 10 percent return on investment,” Kuhn said.
Robert Leech, chief executive officer of the Foundation, had told the committee that the foundation tries to produce for its investors consistent rates of return and to “minimize fluctuations,” so congregations that invest, for example, will have a better sense from year to year of what kind of income they can expect. To achieve a higher rate of return may involve accepting more risk in the marketplace than those investors want, he said.
Leech said the foundation tries to be more a singles-hitter than a home-run king, who inevitably “is going to strike out a lot.”
But DeVries contends that a denomination that has repeatedly cut programs and staff because there’s not enough money to go around needs to consider whether the return the foundation is producing is adequate. She told the committee that minutes from the 2006 General Assembly show that a review of the foundation, a report she said the assembly approved, “stresses the concern about the foundation needing to improve the return on investments in order to continue to attract new donors.”
DeVries has said the synod initiated the overture after discovering that, when it moved $1.3 million of its investments from the foundation to Smith Barney, it produced a one-year yield of more than 10 percent —compared to the foundation’s published return of about 5 percent.
The council has $445 million invested with the foundation, DeVries said, which is about 20 percent of the foundation’s $2 billion in managed assets. Of the council’s investments, from $70 million to $105 million conceivably could be moved, if the assembly changed the rules, DeVries said. Even a 1 percent change in the rate of return, she said, could produce $700,000 to $1 million the council could use for mission.
Frank Adams, chair of the stewardship committee, said that if the council has a choice about where to invest, it will have to hire people to advise it on whether to go with the foundation or somewhere else, which could add to the council’s expenses.
And Linda Valentine, the council’s executive director, said that if the council has more flexibility in how it invests, with that would come more accountability. The council could be evaluated on its investment choices, she said, whereas now “it’s the foundation’s responsibility.”
In an interview, Valentine said, “The foundation has the responsibility to do the very best investing it can” within the parameters the assembly has established, such as requirements for socially-responsible investing through the Mission Responsibility Through Investment program.
When it comes to returns, “we are keenly interested in how well the foundation does because this has a very direct impact on how much money is available for mission,” Valentine said. “We think the foundation should be held to the utmost standard for getting the best return it can within the investment parameters the church sets. … We think that it’s appropriate the spotlight shines on the foundation, so they can be the best investors for the church they can be.”
Adams said the council’s leadership already is involved in discussions with the foundation on other issues, so this conversation will be wrapped into that broader discussion.
Kuhn warned that if the overture from the Synod of the Southwest gets added to that conversation, “we’re making the overture our issue” — in other words, the council gets involved, even though the synod is pushing the issue.
“I think we’re already invited into the discussion,” Adams said. “We’re already there.”
