The Foundation's 2010 audited financial statements are available for your review. The audit for 2011 will be available in late 2012.

You can also see the Foundation's most recent Form 990-PF, Return of Private Foundation and Form 990-T, Exempt Organization Business Income Tax Return, for the year ending December 31, 2010.

Investment commentary for 2010

Investment policy and governance
The Foundation’s investment objective is to generate an inflation-adjusted return in excess of the IRS minimum 5.0 percent payout. Given recent inflation rates in the 2 to 3 percent range, this translates to an annual return requirement of 7 to 8 percent. The Foundation’s investment efforts are coordinated by an Investment Committee of the Board comprised of three Board members and two outside experts, an internal investment staff that includes a chief investment officer and an outside investment advisory firm. The Investment Committee meets at least quarterly with a focus on asset allocation, risk management, performance review and, when needed, investment manager selection. The Committee reviews its written investment policy each year and recommends changes to the Board. The Committee provides quarterly risk and performance reports to the Board.

The Foundation is transitioning its asset allocation from the traditional asset class distinctions of stocks, bonds, alternatives and cash to a purpose-driven asset allocation framework comprised of return-enhancing and portfolio-stabilizing investments (see the Target Asset Allocation chart, right). The goal is to generate the desired returns with lower volatility. The new framework includes more long/short equity and fixed-income investments (rather than long only) with more investment manager discretion and slightly less liquidity. The Foundation continues to maintain more than adequate liquidity to meet its operating needs.

Investment performance
The Foundation’s audited investment balances totaled $759 million as of December 31, 2010 (see the Investment Balances at Year End graph, below). The Foundation’s net investment return for 2010 was 12.5 percent. The Foundation’s investments rebounded significantly from 2008 and 2009. The Foundation’s three-, five- and 10-year investment returns were -1.3 percent, 3.8 percent and 4.1 percent, respectively.

 Payout policy
The Foundation’s payout policy is designed to soften the impact of extremely volatile markets on the annual payout amounts to our communities. We also set maximum future commitment levels so that we do not overextend during periods of downturn in the market. Payout for 2010 was $31.5 million as we defined and ramped up our Advancing Solutions strategy (see the Payouts by Goal Area chart, right and the Annual Payout graph, below). Our target payout for 2011 is $35.6 million. Our long-term payout strategy is to continue to at least meet the required IRS minimum of 5.0 percent payout over time. At the end of 2010, the Foundation has paid in excess of its cumulative IRS payout requirement over the last five years.