Money Market and Certificate of Deposit Policy
The Virginia Baptist Foundation, Inc.
December 2009
Overview
In its capacity as trustee or as agent for certain charitable trusts or accounts which it manages for Virginia Baptist organizations, entities, affiliates and other beneficiaries, the Virginia Baptist Foundation, Inc. (the “Foundation”) currently offers a Money Market investment option and a Certificate of Deposit investment option. These investment options allow Foundation clients to further diversify the asset allocations of their respective investment portfolios. Clients may use these options to invest funds that may have short-term investment horizons or as a part of their long term investment strategies.
Investment Options
Money Market Option: The Foundation’s Money Market Investment Option (the “MM Option”) currently offers investment of (holds) available client cash on hand in an uninsured Money Market Fund operated by a major United States Mutual Fund Company. The cash on hand for investment represents funds for future distribution, funds for future investment, funds held at donor request, operational reserves, etc. Funds invested in the MM Option have an expected investment (hold) term of six months or less, with the exception of a donor requested investment (hold).
Certificate of Deposit Option: The Foundation’s Certificate of Deposit Investment Option (the “CD Option”) currently offers investment in a Certificate of Deposit (“CD”) through the Foundation, at a rate negotiated between the Foundation and a financial institution. CDs are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the maximum amount available per depositor (including single accounts, joint accounts, revocable trust/POD accounts, irrevocable trust accounts corporate/partnership/ unincorporated association accounts, agency and other accounts as defined by the FDIC). Funds invested in the CD Option have an expected investment (hold) term of six months or more.
Operations
Amount: There is no minimum in the MM Option. The CD Option has a $5,000.00 minimum investment amount.
Rate Proposals: The MM Option currently uses the Vanguard Prime Money Market Fund. While the Foundation has no contractual agreement with Vanguard, it does anticipate a long term investment relationship. However, this does not mean poor investment performance overall or poor investment performance among its peers will be tolerated. The MM Option investment performance is monitored on a quarterly basis.
The CD Option regularly receives both unsolicited and solicited proposals from financial institutions. The proposals are reviewed and the financial institution providing the most favorable package of amount minimums, investment terms and yields is selected. The Foundation has no policy restrictions regarding the name, number of or location of financial institutions used.
Rate Review: The rate review applies only to the CD Option. All CDs purchased in the CD Option have a redeemable date and a one-time penalty free redemption. The Foundation has a monthly rate review comparing the current CD rates with the current available rate. Anytime an available rate is .75% (75 basis points) above a current investment in the CD Option, the Foundation will redeem the CD and purchase a new CD with the higher rate.
Administrative Cost Recovery (ACR – Fee): There is no administrative cost recovery fee on the investments in the MM Option. There is a 10 basis point (0.10%) administrative cost recovery fee on the investments in the CD Option.
Reporting: Both the MM Option and the CD Option include quarterly reporting. The investments in both options will be included on the regular client report.