Endowment investment highlights

INVESTMENT MANAGEMENT

Investment committee

Ken Whipple

Investment Committee Chair,

Former CEO and Chairman

Consumers Energy

Michael E. Bannister

Former Chairman and CEO

Ford Motor Credit Co.

Thomas C. Buhl

Senior Vice President, Investments

Wells Fargo Advisors

Angela J. Buk

Vice President, Benefit Funds Investment

3M

Phillip Wm. Fisher

Founder

Mission Throttle L3C

Allan D. Gilmour

President Emeritus

Wayne State University

Michelle Goff

President

Highgate, LLC

Nick Khouri

Former Treasurer

State of Michigan

Jeffrey C. Littmann

Life Trustee

Ralph C. Wilson, Jr. Foundation

Jack Martin, CPA

Chairman

Martin, Arrington, Desai & Meyers, PC

David T. Provost

Retired CEO

TCF Financial Corp.

Christopher L. Rizik

CEO

Renaissance Venture Capital Fund

Sean K. Werdlow

Senior Managing Director and COO

Siebert Cisneros Shank & Co., LLC

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Investment Consultant

NEPC, LLC

Richard K. Ciccione

Principal, Senior Consultant

Scott B. Harsh

Principal, Senior Consultant

Financial Statements

Financials Overview

The Community Foundation for Southeast Michigan secures and invests funds to support the seven counties in its service area. The foundation’s Investment Committee provides direction and oversight to the overarching investment program, particularly with an emphasis on the larger Endowment Fund. The Endowment Fund is subject to a spending plan that is calculated by averaging the portfolio’s prior market values to determine grants available for the year.

Capital markets were challenged throughout 2022 as inflation rose dramatically and the Federal Reserve began to aggressively raise interest rates to tamp down inflation to the 2% target. Concern about a resulting recession caused financial markets to drop across all asset classes. As of Dec. 31, 2022, the Community Foundation’s Endowment Fund totaled ~$786.2 million after a disappointing -11.1 percent return year over year. This is a decrease of ~$122.4 million from the prior year’s market value, due to market declines and continued financial support to our community. Despite the challenging results, the Community Foundation performed better than its peers (endowments and foundations with $100 million to $1 billion in assets), with a 28th percentile ranking over the past 12 months. When looking out over longer time periods, performance ranked above the median of peers, up 4.8 percent and 6.7 percent over the trailing five- and seven-year periods. For context, the Community Foundation seeks to produce returns in the top half of its peer group, while taking similar or less risk.

As we have seen from history, financial markets can change direction with little notice. While 2022 was challenging for investors, 2023 got off to a double-digit positive start. The S&P 500 is up 16.9% through June 30. Inflation has declined from its 2022 peak and fear of a recession has diminished as markets anticipate an end to the Fed’s interest rate increase cycle. It is in times like these that adherence to a well-diversified portfolio and long-term investment horizon is paramount, as a multiyear approach to investing helps mitigate short-term volatility. As such, the Investment Committee works closely with its investment consultant, NEPC, to review investment risks and opportunities as they arise. A subcommittee also is engaged as needed, to keep the momentum going between meetings of the full Investment Committee.

The Community Foundation recognizes and appreciates the dedication and support of all its volunteer Investment Committee members and its consultant.

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