Preamble

The Encounters With Canada Support Foundation (“the Foundation”) was established to provide financial support and stability to the Encounters With Canada Support Foundation.  It was also established to provide and opportunity to anyone who appreciates the Mission of the Encounters With Canada Program and its work over the years to participate in our efforts in the future by donating to a well-managed, cost effective, tax-advantaged, flexible, charitable foundation.  Specifically our mission is to encourage past participants, their parents, related organizations and other individuals along with the corporate community to join with us in supporting Encounters With Canada Support Foundation initiatives.  Effective and prudent portfolio management is important to the future of the Foundation.  The Foundation’s Management and Spending Policy along with its Investment Policy are re-evaluated at least annually by the Foundation’s Board of Directors and by the Foundation’s Investment Committee.

Goals

The goals of the Encounters With Canada Support Foundation are:

• to financially support the various initiatives of Encounters With Canada;
• to provide a well-managed, tax-advantaged, flexible, charitable vehicle that gives past participants and other individuals along with the corporate community an opportunity to join the Foundation in supporting those initiatives;
• to provide a flow-through capacity to allow for the financial support of immediate needs approved by the Foundation;
• to build enduring endowments that will enhance the Foundation’s capacity to support Encounters With Canada initiatives in perpetuity.

Flow-through Funds

Flow-through funds will be accepted by the Foundation and a charitable tax receipt for that donation will be issued on the following basis:

• that the Foundation Board approves of the final use of the funds;
• that the Foundation will distribute 80% of the donated funds;
• that the Foundation will put 20% of the donated funds, less expenses, into the Foundation’s Permanent Endowment Fund for the future support of Encounters With Canada.
• A charitable receipt for 100% of the donation will be given to the donor.

Endowment Funds

The Foundation has developed guidelines and agreements for establishing endowments. The donated capital of the fund will be invested as a perpetual (permanently held) or term (specified period of time of not less than 10 years) endowment. The portion of the income from the Foundation’s portfolio, as determined by the Foundation’s Board of Directors (“Board”), will be distributed.  That amount of that distribution will be accordance with the terms and criteria identified by the donor, or where the Foundation establishes the fund, by the Foundation’s Board.  Endowments established in the name of an individual, group, business or other entity requires a minimum capital contribution of $10,000.

Premise for Investment Policy

The Foundation Board has established a Statement of Investment Policy to provide a framework for the Foundation and its Investment Management (see the Foundation’s Investment Policy) to achieve the identified investment goals, through appropriate asset allocation and risk management.  A fundamental premise of this policy is to ensure that the future growth of the Foundation is sufficient to offset normal inflation plus provide reasonable spending capacity, thereby preserving the constant dollar value and purchasing power of the Foundation for both current and future generations.

Investment Goals

The Foundation’s investment goals for portfolio management are to:

• maintain and preserve capital in real terms in perpetuity;
• provide a steady income in perpetuity,
• attain the highest possible total rate of return including both income and capital appreciation commensurate with the appropriate degree of risk acceptable to the Foundation;
• to maintain a balanced investment portfolio by using diversified asset allocation;
• generate a reasonable cash flow that will help meet current needs as determined by the Foundation’s Board of Directors;
• and to maintain the value of the Foundation’s capital and spending power in real dollars in perpetuity, through both good times and bad.

Asset Allocation

To achieve its investment objectives, the Foundation’s assets are allocated among a number of asset classes.  The purpose of allocating among asset classes is to ensure the proper level of diversification within the Foundation’s portfolio.  These asset classes may include equities such as Canadian or international securities, real estate, or chattels, fixed income securities, or cash and its equivalents. (See Investment Policy)

Board Authority

The Board in its absolute discretion may:

• invest and re-invest the capital and income from time to time comprising the funds in such investments as the Board shall decide;
• deduct or pay out of the income of the Fund all necessary expenses incurred by the Foundation in administering and managing the portfolio.

Note: Without restricting the generality of the above provisions, neither the Foundation’s Board nor the Foundation’s Investment Committee will be liable for any loss which may result (directly or indirectly) from such investments; and,

Preservation of Capital

It is the Foundation's policy that the preservation of capital is paramount in our policy formation and portfolio management.  Undistributed earnings are added to the endowment.  In addition, an investment surplus fund will be developed in years of above average returns to offset the effect of those years of lower than average returns.  The purpose of the above strategies is to maintain the real value of the principal gift(s) over the long term.  

Utilizing the Investment Return on the Foundation’s Portfolio

The endowment portfolio's "total investment return" has two components:

1. Income – This component is comprised of interest income, dividend income, realized capital gain income, and realized capital gain losses;
2. Capital Appreciation – This component is comprised of the growth in the market value of the portfolio that has not been realized.

It is only component (1) that results in the Foundation actually receiving additional funds as a result of portfolio activity.  Thus, it is only this component that produces funds for distribution towards the Foundation’s and the donor’s designated purposes.

The growth in market value or capital appreciation as described in component (2) is neither realized nor liquid until sold.

While both component (1) and component (2) make up the total market value of the Foundation’s portfolio and thus are used in the calculation of the total return on investment for the portfolio, only a portion of the total investment return can be spent for Foundation’s and the donors' designated purposes in any given year.  Thus, a high rate of return on the Foundation’s total portfolio does not mean that the Foundation has that same return available to spend. The largest portion of the return may be growth in the portfolio’s market value, which is neither realized nor liquid and so, the amount that can actually be spent is much lower than the total return.

Spending Policy

It is the Foundation’s policy to review the level of returns in relation to the real returns to determine the amount allocated for annual distribution.  Specifically, the following are the spending priorities of the Foundation:

1. to satisfy the distribution requirements of the Canada Revenue Agency;
2. to maintain an appropriate investment surplus account;
3. to distribute excess funds according to donor wishes and Foundation initiatives;
4. and to transfer excess funds into the Permanent Endowment Funds.