The Foundation’s income derives from assets given by Mr. and Mrs. Bush, primarily 3M stock. The investment portfolio has since been diversified and, before the economic downturn in 2008, had grown to more than five times its original value.
The Foundation's 2011 audited financial statements are available for your review. The audit for 2012 will be available in July 2013.
Investments and Audit
Global markets have been volatile over the recent few years, creating a challenging investment environment from which to extract consistent returns over time. The Foundation’s investment return in 2012 was 9.5 percent. The five- and 10-year investment returns were 1.7 percent and 8.3 percent, respectively. The Foundation’s long-term investment objective is to generate a real return in excess of the IRS minimum 5.0 percent payout. The Foundation has maintained sufficient investment liquidity to meet its operating needs. The Investment Asset Values chart (right) summarizes investment asset values over the past 11 years.
The Foundation’s investment program is coordinated by an Investment Committee of the Board comprised of three Board members and two non-Board members who have significant investment experience; a chief investment officer employed by the Foundation; and an outside independent investment advisory firm.
KPMG LLP serves as the independent auditors for the Foundation. The Foundation’s Finance and Audit Committee reviews the results of the audit examination and recommends them to the Board for approval. The Finance and Audit Committee also reviews the related federal tax returns.
Payout (or Qualifying Distributions as defined by IRS)
The Foundation’s payout policy utilizes a multiyear smoothing formula that softens the impact of volatile markets in determining its annual payout targets. Payout for 2012 was $31.4 million; target payout for 2013 is $35.1 million. The Foundation’s long-term payout strategy is to continue to at least meet the required IRS minimum 5.0 percent payout over time.
The Annual Payout chart (right) and the Payout by Program Area chart (below) summarize the Foundation’s payout trend over the past 11 years and payout by program area for 2012, respectively.
Our aim is to be a highly dependable and effective partner for Minnesota, North Dakota and South Dakota and the 23 tribal nations in the same geography. We expect that our investment and payout policies will provide the steady funding required by our program strategies in 2013 and beyond.