Endowed programs at the Academy are used for student scholarships and for faculty and staff development. We strive to provide a Holy Names education to every student who meets eligibility requirements. Expanded student financial assistance will allow us to preserve the legacy of the Sisters in educating a diverse student body. An increased endowment will enable us to attract and retain high-caliber educators. Our faculty and staff will be able to pursue professional development opportunities and stay on the cutting edge of educational technology.
Endowments, carefully managed for growth as well as current income, are the foundation for long-term stability of the Academy. A named scholarship ($50,000 or more) becomes a permanent tribute to the person whose name it bears and always may be augmented. Donors are welcome to contribute any amount to an existing scholarship. For endowed scholarships, the principal is preserved and only interest is used for awards.
The annual distribution of endowment funds of the Academy of the Holy Names will be based upon a range of 1 percent to 5 percent of a five-year rolling average of investment balances as of September 30th of each year. Depending on the annual returns of the endowment investments, the Finance Committee at its meeting in the 4th quarter, shall determine whether the distribution is 1 percent, 2 percent, 3 percent, 4 percent or 5 percent, or a fraction within that range, but should never be less than 1 percent or exceed 5 percent so long as the corpus does not fall below 25 percent of its five-year rolling average. The annual distribution to the Academy will be made in the month of July in the next fiscal year.
Our Investment Philosophy
The Investment Committee, which is overseen by the Board of Trustees, is guided by the philosophy that protection of principal is equal to or more important than achieving traditional market returns that can range from excellent to damaging in a given year or a given decade. This means that endowment investments will generally underperform in the strongest periods in exchange for minimizing losses in difficult periods.
We are pleased to report the results for the AHN Endowment for the year ending June 30, 2015. The value of the endowment investment account reached $9 million, which represents an investment return of 0.5 percent as well as gifts and pledges totaling $225,000. From its inception in 2005, the endowment has earned nearly $1.9 million, a 4.9 percent annualized return.
The endowment investment account includes a board-designated fund in the amount of $2.1 million, which represents the transfer of surplus operating cash into the investment account in 2013 that will be used during construction relating to the facilities master plan.
The Academy uses the Morningstar Conservative Allocation investment category as a benchmark against which the endowment results are measured. For comparison, this benchmark lost 0.4 percent for the year ending June 30, 2015, and has an annualized return of 4.6 percent from inception. We are pleased to have kept pace with the benchmark over this relatively flat 12-month period, as well as from inception.
The account is invested amongst a diversified group of managers who have strong records in their area of expertise. The conservative benchmark is targeted to provide capital appreciation potential while protecting the purchasing power of the endowment.
The annual distribution of endowment funds of the Academy of the Holy Names will be based upon a range of 1 percent to 5 percent of a five-year rolling average of investment balance. The annual distribution will be based on the investment returns.