• Purpose of the Endowment
• Endowment Governance Policies
• Governance Structure
• Investment Process
  • Asset Allocation
  • Alternative Assets
• Performance
• Frequently Asked Questions
• Make a Gift to the Endowment
• Address and Contact Information

Endowment Governance Policies

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:
• 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.

Investment Objectives

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:

1. To invest prudently, in order to preserve the inflation-adjusted value of the endowment and guard against reductions in its value; and
2. To obtain high returns, with the aims of both contributing to the College's revenue stream and of using endowment returns to increase the size of the endowment over time.

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.

Investment Guidelines

The Investment Objectives are to be achieved with the following guidelines:

1. The Investment Committee shall oversee the Macalester College endowment consistent with Board Policies regarding Investor Responsibility.
2. The endowment portfolio will adhere to the following asset allocation targets:

   Equities	Target
   Domestic Equity	20%
   International Equity	25%
   Total Equities	45%
   Alternative Assets
   Absolute Return	14%
   Timber, Oil & Gas	7%
   Private Capital	11%
   Real Estate	8%
   Total Alternatives	40%
   Fixed Income
   Long Treasuries	10%
   Inflation Protected Treasuries	5%
   Total Fixed Income	15%

3. Manager specific quality standards are to be maintained to achieve risk adjusted return specified in manager mandates.
4. With the exception of U.S. Government securities, no more than 5% of the market value of the endowment shall be represented by securities of one issuer.
5. Manager leverage or financing activities must be approved by the Investment Committee. No leverage will be employed at the fund-of-funds or portfolio level.

Spending Policy

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.

Macalester College · 1600 Grand Avenue, St. Paul, MN 55105  USA · 651-696-6000
Comments and questions to webmaster@macalester.edu