May 2012 Hope Board Meeting

Hope Christian Community Foundation exists
to serve Mid-South donors and ministries to
facilitate the building of God’s kingdom in
our community and throughout the world.
Our mission is to encourage philanthropy
and increase giving.

Hope Christian Community Foundation www.hopeccf.org
Wednesday, May 23, 12 1

BOARD OF DIRECTORS MEETING
MAY 24, 2012

Financial Highlights for Fiscal 2012
(12 months ended April 30, 2012)

Approval of Budget for Fiscal 2013

Charitable Gift Annuities

Other Matters


FINANCIAL HIGHLIGHTS


Assets at April 30,2012 Were $107M,
the Same as the Prior Year
107.2 107.4

71.0 $80
70.7
67.4

Total Assets
52.9 $60
49.7

Millions
$40
31.7

22.3
$20
12.4
6.5
3.3
$0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


Grants Made for the Fiscal 2012 Were $21M
Bringing the Total Since Founding to $213M+
213
191
$200

156
Cumulative Grants $150

Thru 04/30/12 125

Millions
92 $100
73
57
47
38 $50
29
15
8
$0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


Change in Assets for 12 mos. ended 4/30 fy2011 fy2012
Assets at Beginning of Fiscal Year $67.4 $107.2
New DAFs Opened 32.1 1.6
Contributions to DAFs 23.8 24.6

$ Millions
Grants from DAFs (29.2) (21.2)
Agency fund deposits .9 2.0
Agency fund withdrawals (1.5) (.8)
Net Investment Earnings 14.1 (6.1)
Expenses + other-net (.4) .1
Assets at April 30 (in millions) $107.2 $107.4
(DAF = Donor Advised Fund)


CHANGE OF ASSETS DURING FISCAL 2012

Thru 04.30.12
Assets were unchanged for the year
Stock market & other investments negatively
impacted assets by $6.1M offset by net cash inflows
from gifts received vs. grants paid of $3.4M, new funds
opened of $1.6M and net agency fund deposits of
$1.2M
Gifts received total $26.2M, down 0.01% from last year
Grants made were $21.2M, down 27% from last
year(due to one large donor which is a business)


Hope Asset Allocation at April 30, 2012

8%
10%
37%
CASH
Fixed Income
Equities
Alternatives
46%


INCOME STATEMENT
FISCAL YEAR ENDED APRIL 30, 2012


12 months ended April fy 2012 fy 2012 fy 2011
30 (000) Actual Budget Actual
Administrative Fee
$544 $555 $512
Income

$ Thousands
Interest Income 134 132 131
Total Operating
$678 $687 $642
Revenue
Operating Expenses 507 493 474
Operating Income $172 $194 $168
Contributions 5 0 2
Net Income $176 $194 $170


HIGHLIGHTS OF YTD FISCAL 2012
Income lower than budget due to lower average assets
less than estimated
Expenses higher than budget due to cost of IRS audit and
compensation expense
Fee income higher than last year due to higher average
assets
Expenses higher than last year by $32k due to higher
total compensation ($18k or 4.6%), IRS audit($3k),
website costs ($4k) and expense of new brochure($9k)
Net income for the year of $176,00 compares with
budget of $194,000 and $170,000 last year


CASH POSITION
Cash total is $672,000
Operating cash equals $545,000
Hope for Memphis fund cash equals $93,000 total,
with obligations of $91,000 for a surplus of $2,000
Including surplus operating cash, Hope for Memphis
Fund would be $47,000
Generous Community Initiative fund equals $34,000


FINANCIAL OUTLOOK

Hope’s revenue & bottom line is driven by fees on assets and
interest rates
Stock market has been very volatile over the last 12 months
decreasing 20% for the first 5 months and then increasing by
27% the last 7 months; assets at $107M compare to $92M last
September. Volatility seems to have returned recently.
Short term interest rates appear to remain at low levels for
the foreseeable future
At current asset levels, monthly income should be in the $15-
$20K range


PROPOSED BUDGET FOR FISCAL 2013
ENDING APRIL 30, 2013


BUDGET ASSUMPTIONS

25 new funds opened
Average assets of about $110 million
Slight decline in interest income as low rates
continue
3% salary increases at 01/01/2013
3% increase in health insurance costs
7% decrease in fixed expenses and discretionary
expenses: elimination of expenses for new brochure
and IRS audit incurred in previous year


Twelve months ended
2013 Budget 2012 Actual Change
April 30 (000)
+2.8% due to higher
Administrative Fee Income $559 $544
average assets
Interest Income 126 134 low interest rates continue
Total Operating Revenue $685 $678
unchanged due to higher
compensation & health
Total Operating Expenses 507 507 insurance by 3% offset by
lower audit and brochure
costs
Operating Income $178 $172 +3.5%
Contributions 0 5
Net Income $178 $176


CHARITABLE GIFT ANNUITIES


CHARITABLE GIFT ANNUITIES (CGA)
CGA has two components: an fixed annuity payment for the
lifetime of the annuitant & a charitable gift.
For a conventional CGA, the charitable gift is designed to
be approximately 50% of the cost of the annuity remaining
when the annuitant (person receiving annuity) dies
Example: A $100,000 CGA for a 70 year old paying 5.1% is
designed too have about $50,000 remaining when that
person dies 16 years later (according to mortality table)
Issuer of conventional annuity thus assumes two risks:
longevity risk and investment risk


HOPE CGA PROGRAM
We propose to issue CGAs and then re-insure them by purchasing
a commercial annuity
In the previous example, the cost of a commercial annuity would
cost approximately $70,000 leaving a balance of $30,000
immediately available for a charitable gift
We would initially get competitive bids for re-insurance from 3
highly rated companies: Mutual of New York, MetLife or Mutual
of Omaha
The charitable gift could go to the donor’s donor advised fund or
the church or charity of his choosing
We would receive 5-10% of the charitable gift as a contribution
to the Hope for Memphis Fund


HOPE CGA PROGRAM
Advantages:
1. Eliminate longevity risk
2. Eliminate investment risk
3. Immediate gift rather than waiting until death
4. Substantially reduce back office costs since insurance
company would mail checks and be responsible for tax
reporting
Disadvantages:
1. Some people will die earlier than expected
2. The liability for paying the annuity remains a Hope
liability in the event the insurer goes out of business

HOPE CGA PROGRAM POLICIES

Minimum Age: 65
Minimum annuity amount: $25,000
Reinsurance: All will be reinsured; however, to
maximize donor’s charitable deduction, we will tell
donor that we may reinsure
Annuity rates offered shall be those set by the AGCA
(American Council on Gift Annuities)


HOPE CGA PROGRAM STATUS
We have applied to the state of TN to issue annuities;
assuming no problems with our application, we expect
approval in 2-3 weeks
We will spend approximately $1,300 to get in the
business including state application cost and necessary
software
In a related move, we will spend approximately $1300
to add a Planned Giving Section to our website
designed by Sharpe and Company
We are asking for board approval to move forward with
this plan


OTHER MATTERS


NEXT SCHEDULED BOARD OF
DIRECTORS MEETING

September 27, 2012

January 24,2013


May 2012 Hope Board Meeting

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