The major components of the Macalester College Endowment Governance Policies are the Charge to the Investment Committee, the Investment Objectives, the Investment Guidelines, and the Spending Policy.
Charge to the Investment Committee
The Investment Committee, appointed by the Trustees of Macalester College, is responsible for:
- Recommending to the full Board overall Investment Objectives and Guidelines;
- Recommending to the full Board the Endowment Spending Policy;
- Establishing policy asset allocation;
- The selection and appointment of investment consultants and managers;
- The evaluation of investment and manager performance; and
- Periodic reporting to the full Board of Trustees.
The endowment contributes to the fulfillment of Macalester's educational mission in two principal ways:
First, it provides enduring support for the College's educational programs by releasing a substantial and reliable flow of funds to the operating budget, thereby helping ensure the quality of the College's operations, both currently and for the indefinite future.
Second, revenues from the endowment reduce the College's vulnerability to fluctuations in other revenue sources, thereby reducing variability in the College's revenue streams, and strengthening the College's ability to plan its future course with confidence and consistency.
These goals imply two basic objectives for managing the College's investment:
- To obtain returns sufficient to preserve and potentially grow the inflation- adjusted value of the endowment.
- To invest prudently, in order to guard against reductions in the value of the endowment and to ensure sufficient liquidity for the College to deliver on its mission.
Because, in well-functioning markets, riskier assets generally yield higher returns, there is an inescapable trade-off between these two investment objectives. A suitable balance between these objectives requires the College to maintain a diversified portfolio of assets which prudently balances risk and return, and also to craft a spending policy which supports the College's current activities appropriately while preserving and strengthening the College's assets for the benefit of future generations.
The Macalester College endowment shall distribute spendable income equivalent to 5% of a 16-quarter average market value of principal, on a unit basis. The average is to include the November 30 quarter preceding the beginning of the budget year. Excess interest and dividends beyond the spendable amount shall be added back to principal of the endowment. To the extent that spendable income, per this policy and formula, exceeds interest and dividends, principal appreciation and gift corpus may be expended unless prohibited by the corpus restrictions.
The College has beneficiary interest in certain assets held in trust by others. The Investment Committee shall monitor these assets and make recommendations regarding their management and disposition to the appropriate trustee(s) or governing board.