July/August 1994
Philanthropy Journal of North Carolina
7
Invest
Continued from page 6
the lower the money manager’s fee.
After consulting with other foun
dation leaders like William Nichols,
treasurer Of the William and Flora
Hewlett Foundation in California,
and John Craig, treasurer of the
Commonwealth Fund in New York,
Landry decided to create The
Investment Fund for Foundations -
TIFF - and open up an office in
Charlottesville, Virginia.
Landry is chairman’of TIFF’s
board of directors. David Salem,
formerly an investment adviser in
Boston, is chief executive officer.
They are looking at the Common
Fund - a successful mutual fund
established in 1971 for the exclu
sive use by universities, colleges
and private schools - as a model for
their nonprofit. TIFF investors are
limited to private and community
foundations.
“There is a lot of interest in TIP
(TIFF Investment Program),”
Salem says. “The combination of
its origins , the way we’re struc
tured, the fact that our board is all
unpaid volunteers with consider
able experience, the fact that the
members brought us into being and
have invested a lot of money, the
fact that the whole enterprise is
nonprofit - each one of these attrib
utes differentiates the program
from the vast universe of invest
ment alternatives foundations
have.”
The boards for TIFF and TIP
boast such foundation stars as
David White, treasurer of the
Rockefeller Foundation in New
York City; Jack Meyer, chief execu
tive officer of Harvard University’s
investment subsidiary in Boston;
and John Mebane, senior invest
ment officer of The Duke Endow
ment in Charlotte.
Each of these foundations
awarded grants to TIFF, which are
being used to defray start-up costs
which normally would be pinned to
investors’ fees.
And each group has invested
generously. The Duke Endowment,
the only North Carolina investor so
far, put in $25 million.
“We’ve managed bonds our
selves in-house and found we just
didn’t have the expertise in some
areas,” Mebane says, explaining
The Duke Endowment’s interest in
TIP. “We wanted other areas of the
bond market, and they have excel
lent managers for each of the areas
of the bond market.”
The Duke Endowment invested
in TIFF’s bond fund. For now, there
are four other fund choices: a U.S.
equity fund, international equity
fund, emerging markets fund, and
short-term fund.
The diversity of funds lends
security to investors, Salem says.
And each fund is managed by a
team of money managers with
impressive resumes.
Chapel Hill’s Smith Breeden
Associates Inc., which counts
Eastman Kodak Co. and Florida’s
state treasury as clients, is on the
list. Smith Breeden helps manage
TIFF’s bond and short-term funds.
Investment operations began on
June 1. Landry and Salem sought to
begin long before that but ran into
government obstacles.
They needed congressional
approval to gain regulatory exemp
tion like that enjoyed by the
Common Fund. But unlike the Com
mon Fund, their bill got stuck in a
legislative morass. Twice Congress
passed their exemption request in
a larger tax bill. Twice, President
Bush vetoed the tax bill.
On June 1, they began operating
with the Security Exchange Com
mission’s approve hut not with the
special regulatory exemption.
Salem is confident the next Con
gress will provide that.
“For one, it has broad support;
two, its revenue neutral; and three,
it was twice approved by Con
gress,” Salem says.
So far, thirty foundations from
California to New Jersey have
invested in the program. Fourteen
more are committed. They’re as
small as the Hartless Foundation in
Florida with less than $1 million in
assets and as large as the Mac
Arthur Foundation with over $3 bil
lion in its coffers.
“I think it’s going to be an excel
lent product,” Mebane says. “It’s
something that’s been needed for a
longtime.”
Foundations must invest a mini
mum of $50,000 for TIP’s short
term fund and $100,000 for the oth
ers.
To find out more, contact TIFF’s
Foundation Advisers Inc. (FAI) at
(800)-984-0084 or(804)-977-9955.
FAI representatives also are
available to meet individually with
foundation boards or trustees,
Salem says.
Kate
Continued from page 6
Program to set up the program,
which it called Aging at Home.
“We brou^t in about 14 people
from across the state who are in this
business” of providing care to the
elderly, says Vance Frye, director of
the Trust’s Health Care Division.
Initially, he says, the Trust wanted
to develop a uniform model of in-
home care for the frail elderly, and
then put it into effect in communi
ties throughout the state. But the 14
experts didn’t like that idea.
Instead, they wanted the Trust to
set up guidelines for designing vari
ous programs in response to the
needs of individual communities.
The Trust agreed: With $1 million
from the Trust, programs have been
launched in 11 counties. Ranging
from adult daycare to hospice, those
programs differ in structure but are
similar in their aim to help the frail
elderly.
Sandy Crawford Leak, who helps
Maddox administer the Aging at
Home Program for the Trust, says
the initiative is different from others
that target the frail elderly because
one of its primary goals is to make
each local program sustainable at
the end of the two years of funding.
“It’s not only responsive grant
making, but it’s responsible,” says
Leak. “These projects are being
worked with in a way that doesn’t
always happen with philanthropic
kinds of efforts.”
Cope says the Trust will contin
ue to pursue proactive grantmaking
through future projects. Much of
that discussion is going on at
Wachovia Bank, the Trust’s sole
trustee.
Kate Reynolds had no children,
says Cope, and that’s probably why
she set up the Trust in that way,
naming Wachovia Bank of North
Carolina, her husband and her hus
band’s assistant as its only trustees.
She made no provisions for the two
men to, be replaced upon their
deaths, leaving Wachovia in charge
of distributing her wealth.
Advisory boards for the Health
Care Division and the Poor and
Needy Division make funding recom
mendations to the trustee, but the
final say in all grantmaking and pol
icy decisions Ues with Wachovia.
Unlike family foundations, at
which descendants of the founder
might have different grantmaking
philosophies, Kate B. Reynolds’
wishes are carried out to the letter.
“The corporate trustee,” says
Cope, “keeps its eye on the wishes
of the grantor.”
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