|
|
 |
|
|
HOW TO BECOME AN INVESTMENT MANAGER FOR GCF
Until 1997, The Greater Cincinnati Foundation (GCF) operated exclusively in trust form, so only institutions with trust powers were eligible to manage the Foundation's investments. Recognizing that this arrangement discouraged non-bank financial managers from introducing their clients to GCF's charitable giving services, the Foundation added a corporate form through which non-trustee institutions can now invest assets. Today, eight banks and 13 other financial institutions manage GCF's $400 million asset base. The community foundation field refers to this arrangement as "The Triple Win": by formalizing a relationship with GCF, you retain your clients' charitable book of business, your clients receive the high-quality philanthropic services that GCF can provide, and the community benefits from assets that your clients commit to charitable purposes.
General Selection Criteria
Financial firms interested in working with GCF must meet certain criteria and comply with a simple due diligence process. (See Prospective Investment Managers: Due Diligence Requirements below for more information.) GCF negotiates investment relationships at the corporate level (usually with the local branch manager), rather than with individual financial advisors. Upon request, GCF will prepare a discussion draft of its standard Investment Agency Agreement for review by the prospective advisory firm and its legal counsel.
In general, GCF entertains investment proposals from local firms whose client(s) are prepared to contribute an aggregate of at least $250,000 to establish new charitable funds at GCF. This minimum investment threshold ensures that new investment firms have incentive to engage in and fully develop a solid, long-term relationship with the Foundation.
Establishment of Pooled Accounts
GCF asks investment managers to offer four account options: a Balanced Pool; an Equity Pool; a Fixed Income Pool; and a Money Market Pool. (See Draft Investment Agency Agreement for details regarding GCF's general investment policies.)
Selection of Investment Management Vehicle
Active Portfolio Management. Firms for which the major source of revenue is active money management (as opposed to financial planning, brokerage services, or the sale of commission-based products) and fee-only firms may be permitted to actively manage GCF accounts, regardless of the value of funds under management.
Use of Mutual Funds. All wire houses, broker/dealers who execute trades for solo investment practices, and firms whose primary source of revenue is derived from financial planning or the sale of commission-based products use mutual fund investment vehicles until they reach $5 million in GCF funds under management. At that time, GCF's Investments Committee will evaluate any request to move to active portfolio management. Firms engaged in mutual fund management have two different investment options:
|
- Capital Research & Management's American Funds. GCF's Investments Committee has approved the use of the following American Funds options:
Balanced Fund (Balanced Pool)
Washington Mutual Investors Fund (Equity Pool)
Intermediate Bond Fund of America (Fixed Income Pool)
Cash Management Trust of America (Money Market Pool)
- In-house/Proprietary Mutual Funds. Upon request, GCF's Investments Committee will review a prospective manager's proprietary mutual fund family to determine which fund will be acceptable for each of the four required pools.
|
Investment Management Fees
The investment fee for actively managed portfolios is negotiable. However, given the Foundation's charitable mission, firms are encouraged to remain competitive with the other institutions that are managing funds for GCF. Most of the Foundation's active managers currently charge 28 basis points annually.
Firms using the American Funds exclusively are entitled to receive the standard fee associated with such mutual funds. GCF's investment managers purchase 4 shares at NAV. All firms using mutual fund products must ask GCF's donors to sign a disclosure form acknowledging that the advisor and/or broker receives a 12b-1 commission for managing the account. GCF provides each investment firm a quarterly report detailing the fair market value of all component funds, along with the individual referral advisor associated with those funds. Such information can be used to properly allocate any trailing commissions associated with the Foundation's mutual fund investments.
|
PROSPECTIVE INVESTMENT MANAGERS: DUE DILIGENCE REQUIREMENTS
The Greater Cincinnati Foundation (GCF) requires all qualified investment firms to provide the following documentation prior to entering into an investment agency relationship with GCF:
Prospective Investment Managers' Qualification Form (download below), signed by an authorized representative of the investment firm; and
Certified proof of insurance including, but not limited to, $1 million in coverage for each of the following:
- errors & omissions insurance;
- fidelity bond; and
- fiduciary liability.
In addition:
Firms that are members of the New York Stock Exchange (NYSE) must submit current U-4 Forms for the financial advisors who will work with GCF’s funds.
Firms that are not members of the NYSE must provide:
- a copy of the firm’s most recent audited financial statement;
- a copy of the ADV form filed annually with the Ohio Securities Division and/or the Securities & Exchange Commission; and
- the CRD number for all affiliated financial advisors who refer funds to GCF.
For more information about initiating an investment management relationship with The Greater Cincinnati Foundation, or to receive a discussion draft of the standard Investment Agency Agreement, please Minda Thompson, Director of Professional Advisor Services by calling (513) 768-6136.
|
|
|
|
Prospective Investment Managers Qualification Form |
|
|
|
|
|
|
|
|
