Report on Investing our Funds, 2001

Report to Patapsco Friends Preparative Meeting on
Investing our Funds

28 January 2001

In our December Meeting for Business, Friends expressed concern about the $10,000 that our Meeting has “just sitting there.” One Friend expressed the thought of reducing their contribution next year because “we have enough.” Another Friend suggested giving it away for a worthy cause — “to Africa or whatever.” Another Friend said that we ought to be saving for the future of our Meeting, to be good stewards, just as in our personal lives we might save for a child’s college education.

Analysis of the matter was delegated to an ad hoc Building Committee that has not yet gathered. Since it has not gathered, I decided to do some investigating on my own and am providing an interim report of my findings.

    1. Indeed our $10,000 is “just sitting there” — “there” being a checking account in Sandy Spring Bank. I feel we need to do something about this inactive money without waiting for further analysis by a Building Committee.
    2. I talked with some Sandy Spring Trustees and one who had resigned Trustees in disagreement over their investment policies. Sandy Spring maintains a checking account in Sandy Spring Bank and keeps an operating reserve in a money market account. In the past few years they transferred their assets into two socially responsible investment funds: Domini Corporate Responsibility Fund (100% stock), and Friends Fiduciary Fund (a mixture of stocks and bonds that pays income to the Meeting).
    3. These reserves are of three types: unrestricted, restricted by the Meeting for special funds, and restricted by the donor.
    4. The trustee who resigned in protest said that he had led the effort to shift SSFM’s investments from a “nonfocused” collection of money market funds and Sandy Spring Bank stock to a focus on socially responsible investing. He said they collected a gym bag full of brochures on various funds. He said from their analysis he highly recommended Domini. (A quick check of their website and prospectuses for the equity fund as well as the new bond fund started last summer seemed to confirm his judgment.) He was highly opposed to the Friends Fiduciary Fund because it is not a regulated fund and does not conform to standard fund reporting requirements. He said he was a mathematician but couldn’t make any sense out of the reports that the fund does issue. Finally, he disagreed with the idea of getting income from a reserve fund to be used for operating expenses. (“Dead Friend’s funds ought not be used to support living Friends. Living Friends ought to support themselves.”)
    5. Investing in a socially responsible equity fund has the benefit that investments are made only in companies who meet strict socially responsible standards. Domini may invest in other companies (not clear how much) and pressure them in stockholder meetings. For example, their website discusses some successes in pushing Nordstrom to stop using sweatshops. Domini’s bond funds reserve a certain percentage of the investment (such as 10%) for investment in high-risk loans to poor communities.
    6. Of more interest to me is the Calvert Foundation’s micro-investment program, which is not included in Sandy Spring’s investment plan at this time. Brochure enclosed. Under this program, you purchase a certificate redeemable in 1, 3, or 5 years and specify the amount of interest you want to earn from 0% to 4%. The money is invested directly into small businesses, micro-enterprises, community development, and affordable housing — nationally or internationally, your choice. I am interested in this program because it meets one of the criteria we set forth many months ago in looking for peace and social justice activities, viz., helping people to fish rather than giving them fish.”
    7. I have four proposals that I would like to lay before the Meeting for a first reading.

First, I propose that we adopt a policy of keeping as little money as feasible (10% or $1000 whichever is smaller) in our operating funds checking account and investing the rest in two kinds of reserves: ready reserves, and long-range reserves. The ready reserves would be some mix of Domini Funds (40% of assets?). They would be liquidable in a week or so — just like any mutual fund — if we needed the money. I propose we keep 50% of assets in the Calvert Foundation program at 3% interest so that they more or less keep up with inflation. We would buy $1000 dollar certificates at staggered times — one every other month?

Second, I propose that we adopt a policy of not dipping into our reserves for routine operating expenses. Donating to the Presbyterian Church for part of the expense of their furnace would be an example of a case where it would be OK to dip into reserves. We should normally shift any excess operating funds at the end of the year into our reserves.

Third, as a corollary of the first proposal, I propose we recommend that Friends to make small, regular donations to the Meeting throughout the year so that we can keep our operating account as low as possible. A convenient way to do this is to use your bank’s web page to schedule small payments to our account.

Fourth, I propose that we temporarily place the responsibility for investing our assets, a concern of Trustees, with M&O. Presumably we will want eventually to set up a Trustees Committee.

  1. I believe that these proposals would meet all of the concerns expressed in last business meeting. Our money wouldn’t be just sitting there. We would be able to follow our leading expressed in the Peace and Social Justice threshing session of helping others in a fundamental way and at the same time be good stewards of our Meeting’s future. There are many further possibilities for outward action that could flow from our investments such as establishing a relationship with one or more of the recipients of a micro-project investment. When our children become teens capable of doing fundraisers, the funds they raise could go directly into the micro-project investments. And so forth.
  2. With that thought in mind, my proposals will obviously need more detailed analysis before the Meeting could adopt them (such as a more detailed reading of prospectuses). I hope that other Friends will join me in undertaking that analysis.

Respectfully submitted,

John Buck

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