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THE FINANCES OF THE ROTARY FOUNDATION FISCAL 2009-10. RRFC INSTITUTE February 2011. OVERVIEW. Rotary Finance Overview Revenues and Spending Net Assets and Operating Reserve TRF Investments Results 30-Nov-2010. TRF’s Finance Organization. *Coordinates with RI Audit Committee. - PowerPoint PPT Presentation
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THE FINANCES OFTHE FINANCES OFTHE ROTARY FOUNDATIONTHE ROTARY FOUNDATION
FISCAL 2009-10FISCAL 2009-10
RRFC INSTITUTERRFC INSTITUTEFebruary 2011February 2011
OVERVIEWOVERVIEW
Rotary Finance Overview
Revenues and Spending
Net Assets and Operating Reserve
TRF Investments
Results 30-Nov-2010
TRF’s Finance OrganizationTRF’s Finance Organization
*Coordinates with RI Audit Committee
RI CFO TRF GM
General Secretary
Board of Trustees
Rotary International Corporate Member
InvestmentAdvisory
Committee
TRF Finance-Finance-Audit*
TRF Staff
Financial Services Staff
Rotary’s FinancesRotary’s Finances
ExpensesRelated to DuesRelated to Services & Other
Activities
ExpensesProgram Awards Program OperationsFund DevelopmentAdministration
The Rotary FoundationThe Rotary FoundationRotary InternationalRotary International
Revenue SourcesDuesServices & Other ActivitiesInvestment Income
Revenue SourcesContributionsInvestment Income
Financial GovernanceFinancial Governance
The Rotary FoundationThe Rotary FoundationRotary InternationalRotary International
RI Board of Directors - Treasurer
- RI Finance Committee – Standing Committee
TRF Board of Trustees - TRF Board Finance Committee
- TRF Investment Advisory Committee Standing Committee
- Stewardship Committee
RI Audit Committee covers both RI & TRF
Oversight by RI Operations Review Committee
Revenues and Spending2009-10 Results
And 10 Year Trends
The Rotary Foundation2010 Financial Results
US$(millions)
Investment Earnings$54.3
Contributions$268.5
Program Awards$187.0
Program Ops $17.9
Fund Dev $16.5
Revenues
$322.8
Expenses
$226.6
General Admin $5.2
Increase in Net Assets $96.2
The Rotary Foundation Revenue Trends
US$(millions)
60 41
201239
161 162180
323
138
60
-200
-100
0
100
200
300
400
01 02 03 04 05 06 07 08 09 10
Contributions Net Investment IncomeNet Investment Losses
The Rotary Foundation Contribution Revenue Trends
US$(millions)
AP
F R
ec
ord
0
50
100
150
200
250
300
01 02 03 04 05 06 07 08 09 10
Annual Programs Fund PolioPlus Gates Polio
Permanent Fund Other Flow Through
____PEFC____
The Rotary FoundationThe Rotary Foundation2009-10 Designation of Contributions2009-10 Designation of Contributions
US$268.5 millionUS$268.5 million
Other$6.0 2%
Permanent Fund$10.5
4%
PolioPlus$151.6
57%
Annual Programs Fund
$100.4 37%
Program Operations
Scholarship and grant administration for EP, HP and PP programs as well as support for Rotarians who implement international activities.
Fund Development
Personnel services, communications, public relations, supplies, computer support, legal counsel and recognition (ranging from awards to events).
General Administration
Personnel services, communications, computer support, audit fees, Associate Foundations and Trustee services (administrative support, travel, meetings and committees).
The Rotary Foundation
Expense Categories
What the Foundation Spent in 2010What the Foundation Spent in 2010 US$226.6 millionUS$226.6 million
Humanitarian23%
PolioPlus53%
Fund Development
8%
General Administration
2%Other
1%
Educational13%
Program Awards & Expenses
90%
The Rotary Foundation Total Awards & Expenses
US$(millions)
116 112 110 103128 128 138
247
188
227
0
70
140
210
280
01 02 03 04 05 06 07 08 09 10
Program Awards Program OperationsFund Development General Administration
90%
The Rotary FoundationThe Rotary FoundationTrends in Awards & OpsTrends in Awards & Ops
US$(millions)US$(millions)
102 95 94 87110 108 119
228
168
205
0
40
80
120
160
200
240
01 02 03 04 05 06 07 08 09 10
Educational Humanitarian Future VisionDAF PolioPlus
The Rotary FoundationThe Rotary FoundationPermanent Fund SpendingPermanent Fund Spending
US$(millions)US$(millions)
4.7
5.66.3
0.9
4.64.9
5.7
7.5
0.4 0.20
1
2
3
4
5
6
7
8
01 02 03 04 05 06 07 08 09 10
PolioPlus Program PolioPlus Program Since Inception through June 2010Since Inception through June 2010
Total Revenues of $1,176 billionTotal Revenues of $1,176 billion
Rotarian Contributions
$53947%
TRF Contributions
$1109%
Earned Income$16814% Gates and Google
$35930%
3.4 4.6 5.5 6.17.6 8.7 9.6 10.2 9.4
7.53.7
3.23.5
4.1
5.06.1
6.77.1
6.6
5.8
2.6 2.21.9
2.3
3.1
2.12.3
2.12.2
2.2
0.10.4
2.4
9.7 10.0 10.912.5
15.716.9
18.6 19.5 18.6 17.9
0
5
10
15
20
25
01 02 03 04 05 06 07 08 09 10
Humanitarian Educational PolioPlus Other
The Rotary FoundationThe Rotary FoundationTrends in Program Operations Trends in Program Operations
Expenses – by programExpenses – by program(in $millions)(in $millions)
4.4 5.1 4.6 4.9 5.7 6.6 6.3 6.3 5.7 5.2
9.611.3 12.1 11.6 12.2
13.7 12.6 13.6 14.5 16.5
9.710.0 10.9 12.5
15.7
16.9 18.619.5 18.6 17.9
23.726.4 27.6
29.0
33.637.2 37.5
39.4 38.8 39.6
0
5
10
15
20
25
30
35
40
45
01 02 03 04 05 06 07 08 09 10
General Administration Fund Development Programs Operations
The Rotary FoundationThe Rotary FoundationTrends in Total Operating Expenses –Trends in Total Operating Expenses –
by Activityby Activity(in $millions)(in $millions)
Net Assets and Operating Reserve
Net Assets at 30 June 2010Net Assets at 30 June 2010US$657.5 millionUS$657.5 million
Permanent Fund$187.2
28%
Annual Programs Fund
$329.150%
Other$11.22%
PolioPlus$130.0
20%
Rotary Foundation Net AssetsRotary Foundation Net Assets (in $millions)(in $millions)
Annual Programs
Fund$310
Permanent Fund$168
PolioPlus$78
Other$6
30 June 2009 30 June 2009
US$562 millionUS$562 million
Annual Programs
Fund$329
Permanent Fund$187
PolioPlus$130
Other$11
30 June 2010 30 June 2010
US$657 millionUS$657 million
Net Assets increased over US$95 million
Annual Programs Fund Net Annual Programs Fund Net AssetsAssets
(in $millions)(in $millions)
30 June 200930 June 2009
US$310US$310
DDF$179
WF$131
DDF$172
WF$157
30 June 201030 June 2010
US$329US$329
Net Assets increased over US$19 million
The Rotary Foundation The Rotary Foundation Net AssetsNet Assets
US$(millions) US$(millions)
537466 494
571603
637
738692
562
657
0
200
400
600
800
01 02 03 04 05 06 07 08 09 10
140 151 151 146 135 154 172 179 172
112 113 116 129 189204 176 173 183
104 50 3673
7381
11786
(42) (26)
149
151
303348 374 405
475434
329310313356
(50)
50
150
250
350
450
550
01 02 03 04 05 06 07 08 09 10
District Designated Fund World Fund Earned Income Reserve
The Rotary FoundationThe Rotary FoundationAnnual Programs Fund by ComponentAnnual Programs Fund by Component
(in $millions)(in $millions)
104
5036
73 73 81
117
86
-26-42
-100
-50
0
50
100
150
200
01 02 03 04 05 06 07 08 09 10
Earned Income Reserve 50% Minimum Required Operating Reserve
The Rotary Foundation The Rotary Foundation Earned Income Reserve Earned Income Reserve
Balance at Year EndBalance at Year End(in $millions)(in $millions)
INVESTMENTS
Trustees’ ResponsibilitiesTrustees’ Responsibilities
Formulate investment policies
Develop investment objectives
Establish asset allocation strategies
Investment Advisory CommitteeInvestment Advisory Committee
9 members, of whom 6 are Rotarians with professional investment experience; 6-year terms
Responsibilities:
• Review and monitor investment results
• Recommend changes to investment policy and structure, as appropriate
• Recommend and approve hiring and termination of managers
• Advise Trustees on investment matters
Investment ConsultantInvestment Consultant
NEPC was appointed by TRF and RI effective 1 December 2009.
Edward O’Donnell, CFAKristin Reynolds, CFA, CAIA
Consults for RI General Fund, APF, and PF.
Annual full-retainer fee of $275,000 plus out-of-pocket expenses.
RI’s cost is estimated at $40,000
Investments at 30 June 2010Investments at 30 June 2010US$670.6 million*US$670.6 million*
Annual Programs49%
Donor Advised Fund1%
Life Income Agreements4%
PolioPlus/Gates Foundation
20%
Canada1%
Permanent Fund25%
*NOTE: These assets do not include short-term cash or contributed securities, therefore these figures will not tie to the Financials
Changes to APF & PF Investment ProgramsChanges to APF & PF Investment ProgramsCalendar Year 2010Calendar Year 2010
Hired new investment consultant with more expertise in endowment and foundation funds
Modified policy asset allocations to reduce equity risk and volatility of returns
Added real assets to provide protection against inflation
Terminated 5 managers and appointed 8 new managers
Established operating reserve and completed initial funding of US$20 million
Evolution of APF InvestmentsEvolution of APF InvestmentsTarget Asset AllocationsTarget Asset Allocations
0%
20%
40%
60%
80%
100%
1995 1997 1999 2001 2003 2005 2007 2009
U.S Equities Non-U.S. Equities Fixed Income Real Estate
Private Equity Hedge Funds Real Assets
Annual Programs FundAnnual Programs FundAsset Allocation ComparisonAsset Allocation Comparison
New Asset Allocation
Prior Asset Allocation
20%
35%
20%
30%
35%
20%
10%
10%
5%
5%
10%
U.S. Equity Non-U.S. Equity Fixed Income Real Estate Hedge Funds Real Assets
Annual Programs FundAnnual Programs FundCurrent Policy Asset AllocationsCurrent Policy Asset Allocations
U.S. Equities20%
Non-U.S. Equities
20%
Fixed Income35%
Real Estate10%
Hedge Funds5%
Real Assets10%
Annual Programs Fund - PhaseAnnual Programs Fund - Phase I I
Building Operating ReserveBuilding Operating Reserve
40%
35%
25%
Equities Fixed Income
Alternatives
29%
71%
Funded Unfunded
Programs Operating Reserve
Annual Programs Fund - PhaseAnnual Programs Fund - Phase II II> 50% Funded Operating Reserve> 50% Funded Operating Reserve
45%
20%
35%
Equities Fixed Income
Alternatives
60%40%
Funded Unfunded
Programs Operating Reserve
TRF - Annual Programs Fund TRF - Annual Programs Fund Investment ReturnsInvestment Returns
Evolution of Permanent Fund InvestmentsEvolution of Permanent Fund InvestmentsTarget Asset AllocationsTarget Asset Allocations
0%
20%
40%
60%
80%
100%
1995 1997 1999 2001 2003 2005 2007 2009
U.S Equities Non-U.S. Equities Fixed Income Real Estate
Private Equity Hedge Funds Infrastructure Real Assets
Total Fund Asset Allocation – Permanent FundTotal Fund Asset Allocation – Permanent Fund
Current Asset Allocation
Prior Asset Allocation
30%
30%
25%
25%
15%
10%
7%
12%
7%
13%
7%
5%
9%
5%
US Equity Non-U.S. Equity Fixed Income Real Estate Infrastructure
Private Equity Hedge Fund Real Assets
Permanent FundPermanent FundCurrent Policy Asset AllocationsCurrent Policy Asset Allocations
U.S. Equities30%
Non-U.S. Equities25%
Fixed Income15%
Real Estate7%
Hedge Funds7%
Real Assets9%
Private Equity7%
Permanent Fund Spending RatesPermanent Fund Spending Rates
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
1995-00 2000-03 2003-04 2004-07 2007-08 2008-10 2010-11
Program Awards Program Operations General Administration
Fund Development Investment Fees
TRF Permanent Fund TRF Permanent Fund Investment ReturnsInvestment Returns
0.6%
-30%
-20%
-10%
0%
10%
20%
30%
01 02 03 04 05 06 07 08 09 10 11 NovYTD
PF Benchmark Avg Annual Return
TRF PolioPlus Fund* TRF PolioPlus Fund* Investment ReturnsInvestment Returns
4.3%
0%
2%
4%
6%
8%
10%
12%
01 02 03 04 05 06 07 08 09 10 11 NovFYTD
PolioPlus Benchmark Avg Annual Return
* Excludes Gates Gift
THE ROTARY FOUNDATION THE ROTARY FOUNDATION RESULTS RESULTS FOR THE FIVE MONTHS ENDEDFOR THE FIVE MONTHS ENDED
30 November 201030 November 2010
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2006 2007 2008 2009 2010
Annual Programs Fund Permanent FundDisaster Recov/ Named Gifts Donor Advised FundPolioPlus PolioPlus (BMG & Google)Budget
The Rotary FoundationThe Rotary Foundation Contribution TrendsContribution Trends
Total Contributions for the Five Months Ended 30 NovemberTotal Contributions for the Five Months Ended 30 NovemberUS$ (thousands)US$ (thousands)
(175,000)(150,000)(125,000)(100,000)(75,000)(50,000)(25,000)
025,00050,00075,000
2006 2007 2008 2009 2010
Net Investment Return Budget
The Rotary FoundationThe Rotary Foundation Net Investment ReturnNet Investment Return
For the Five Months Ended 30 NovemberFor the Five Months Ended 30 NovemberUS$ (thousands)US$ (thousands)
0
20,000
40,000
60,000
80,000
100,000
2006 2007 2008 2009 2010
Fund Dev & GA Program Operations Program Awards Budget
The Rotary FoundationThe Rotary Foundation Expense TrendsExpense Trends
Total Awards and Expenses for the Five Months Ended 30 November Total Awards and Expenses for the Five Months Ended 30 November US$ (thousands)US$ (thousands)
Here is the way to quickly access financial Here is the way to quickly access financial information for both Rotary International and The information for both Rotary International and The Rotary Foundation:Rotary Foundation:
•Go to Rotary’s website: Go to Rotary’s website: http://www.rotary.orghttp://www.rotary.org
•Click on the first tab - “Click on the first tab - “About UsAbout Us” and you will see another ” and you will see another tab - “tab - “FinancialsFinancials” ”
•Click on “Click on “FinancialsFinancials” and you will see general financial ” and you will see general financial information and a menu with several options that include information and a menu with several options that include Rotary’s investment philosophy, Frequently Asked Questions Rotary’s investment philosophy, Frequently Asked Questions (FAQ) and Download Documents. (FAQ) and Download Documents.
•If you click on If you click on Download ResourcesDownload Resources, you can find RI’s and , you can find RI’s and TRF’s financial statements, annual reports, government filings TRF’s financial statements, annual reports, government filings and more. and more.