AACRAO Home > About Us > AACRAO Policies > Investment Policy

Association Investment Policy

1. Board of Directors

1.1. Fiduciary Capacity – All funds of the American Association of Collegiate Registrars and Admissions Officers (“AACRAO”) are held by its Board of Directors (“Board”) as a fiduciary. Therefore, all restricted and unrestricted funds of the organization are held by the Association as a steward for the sake of carrying out AACRAO’s mission and objectives. The following instructions are to be understood and employed with that sense of stewardship in mind.

1.2. Prudent Investor - The basic investment standards shall be those of a prudent investor as articulated in laws of the District of Columbia. This standard requires that the Board invest and manage AACRAO’s funds as a prudent investor would, in light of the purposes, terms, distribution requirements, and other circumstances of the funds. This standard requires that the Board exercise reasonable care, skill, and caution, and is to be applied to investments not in isolation but in the context of the overall investment portfolio and as a part of an overall investment strategy, which should incorporate risk and return objectives reasonably suitable to the portfolio. In making and implementing investment decisions, the Board has a duty to diversify the investments of the portfolio unless, under the circumstances, it is prudent not to do so. In addition, Board members must conform to fundamental fiduciary duties of loyalty and impartiality; act with prudence in deciding whether and how to delegate authority and in the selection and supervision of agents; and, incur only costs that are reasonable in amount and appropriate to the investment responsibilities of those agents.

1.3. Conflicts of Interest – The Board will not invest AACRAO funds with any firm or in any vehicle that may monetarily benefit a member of the Board or the AACRAO staff as a result of the transaction.

1.4. Amendment – The Board reserves unto itself the exclusive right to amend or revise this policy.

2. Investments Committee

2.1. Purpose - The purpose of the Investments Committee is to assist the Board in reviewing investment policies, strategies, transactions, and the performance of the Association’s investment portfolio(s).

2.2. Membership – The Investments Committee shall be composed of the President, the Past-President, the President-Elect, and the Vice President of Finance, who will serve as chair. The Executive Director will serve as ex-officio member.

2.3. Responsibilities – The Investments Committee shall

2.3.1. supervise the overall implementation of AACRAO’s investment policies by the Executive Director and outside investment professionals;
2.3.2. select, engage, and terminate all outside portfolio managers and other outside investment professionals; and

2.3.3. establish investment guidelines (see section 7 below) that direct the investment of the Association’s portfolio including asset allocation, risk tolerance, and investment time horizon and present such guidelines to the Board for final approval; and,

2.3.4. review and evaluate the performance of the investment portfolio and the portfolio manager(s) and other outside investment professionals at least once per fiscal year to assure adherence to policy guidelines, and monitor progress toward achieving investment objectives, and report the results of such reviews and evaluations to the Board; and,

2.3.5. provide overall supervision to the Executive Director to whom the Committee delegates specific duties related to AACRAO investments; and,

2.3.6. act in accord with this investment policy and all applicable laws and state and federal regulations that apply to nonprofit agencies including, but not limited to, the Uniform Prudent Investors Act of 1994 and the Uniform Management of Institutional Funds Act; and,

2.3.7. perform other duties as delegated by the Board from time to time.

3. Management

At the discretion of the Investments Committee, specific duties, tasks, and responsibilities related to the Association’s investments may be assigned or delegated to the Executive Director from time to time, subject to the overall supervision of the Investments Committee.

4. Portfolio Managers

4.1. Portfolio Manager(s) - Relative to the perpetual life of AACRAO’s long-term investment funds, service on the AACRAO Board or its Investments Committee is transitory. In addition, it is unlikely that a sufficient number of members of the Investments Committee will possess the technical expertise to manage directly the investment portfolio. For these reasons, the Investments Committee shall employ one or more portfolio managers (investment advisors, investment managers, investment consultants, investment custodians, etc.) to manage AACRAO’s investment funds rather than directly managing investments itself.

4.2. Selection and Termination of Portfolio Manager(s) – Portfolio managers shall be selected and terminated by majority vote of the Investments Committee.

4.3. Investment Guidelines – While the portfolio managers are responsible for day-to-day investment decisions on behalf of the Board, they will follow written guidelines that limit their actions to a range of investment activities approved by the Board (see section 7 below).

4.4. Responsibilities of Portfolio Managers – Portfolio managers shall

4.4.1. consult with the Investment Committee and Executive Director on investment goals and strategic long-term direction of the Association; and,

4.4.2. recommend investment guidelines, asset allocation strategies, risk-based fund objectives, and appropriate investment management structures; and,

4.4.3. adhere to all investment guidelines established by the Board (see section 7 below); and,

4.4.4. select, monitor, and evaluate investment managers and/or investment entities; and,

4.4.5. provide and review quarterly and annual performance measurement reports and assist the Investments Committee in interpreting the results; and,

4.4.6. provide appropriate monthly reports to the Association’s accounting staff; and,

4.4.7. review the portfolio and recommend actions, as needed, to maintain proper asset allocations and investment strategies for the objectives of each fund in light of the economic and market environments; and,

4.4.8. assist in an annual review of the Investment Policy; and,

4.4.9. execute such other duties as may be mutually agreed.

5. Operating Reserves

AACRAO will maintain sufficient operating reserves to ensure adequate cash for operations. These reserves shall be maintained in investment instruments according to the approved Investment Guidelines (see section 7 below). The Executive Director is responsible for advanced planning that will ensure that the Association’s cash flow requirements are met, and for notifying portfolio managers and other money managers of anticipated distributions and liquidity requirements.

6. Long-Term Investment Funds

The Board maintains three long-term investment funds: an Infrastructure Fund, a Strategic Initiatives and Investment Fund, and an Unrestricted Endowment Fund. It is anticipated that the Association will spend only a limited amount from these funds in order to ensure their perpetual existence. Other unrestricted, temporarily restricted, or permanently restricted funds may be established by the Board from time to time.

6.1. Infrastructure Fund

6.1.1. Purpose - The purpose of the Infrastructure Fund is to fund expenses for equipment and hardware upgrades, software acquisition and development, office repairs and improvement, or similar infrastructure costs that are unexpected, and therefore unbudgeted, or that the Board considers imprudent to fund from operating revenues.

6.1.2. Distributions - Distributions from the Infrastructure Fund are made as needed and require the approval of the Board, which should review the need for distributions from the fund at least once per fiscal year. Distributions from the fund may not cause the fund to drop below its minimum balance.

6.1.3. Contributions – Contributions to the Infrastructure Fund must be approved by the Board and will normally comprise 25% of those net revenues and unrestricted gifts designated by the Board for investment. The Board should evaluate whether new contributions can be made to investment funds at least once per fiscal year. Contributions to the fund may not cause the fund to exceed its maximum balance.

6.1.4. Minimum/Maximum Balances - The fund should maintain a minimum value of $100,000 and the maximum value of the fund should not exceed one-third of the then current fiscal year’s budgeted expenditures. That is, if the current fiscal year budgeted expenditures are six million dollars, the value of the fund should not exceed two million dollars.

6.1.5. Co-Mingling of Investments – The Infrastructure Fund is to be invested separately from other investments (in one or more accounts) and may not be co-mingled with other investments.

6.2. Strategic Initiatives and Investments Fund

6.2.1. Purpose - The purpose of the Strategic Initiatives and Investments Fund is to provide a means for the Board to develop new programs or replace outdated ones, to expand the Association’s interests and services, or to invest in new revenue-producing opportunities. Such programs, services, or investments should contribute directly or indirectly, in time, to the overall financial health of the Association. When used for programmatic development, this fund should not serve as a source of ongoing support for Association endeavors, but rather should provide seed money for services that would eventually need to be supported by current revenues or discontinued.

6.2.2. Distributions - Distributions from the Strategic Initiatives and Investments Fund are made as needed and require the approval of the Board, which should review the need for distributions from the fund at least once per fiscal year. Distributions from the fund may not cause the fund to drop below its minimum value.
6.2.3. Contributions – Contributions to the Strategic Initiatives and Investments Fund must be approved by the Board and will normally comprise 25% of those net revenues and unrestricted gifts designated by the Board for investment. The Board should evaluate whether new contributions can be made to investment funds at least once per fiscal year. Contributions to the fund may not cause the fund to exceed its maximum value.

6.2.4. Minimum/Maximum Value - The Strategic Initiatives and Investments Fund should maintain a minimum value of $100,000 and the maximum value of the fund should not exceed one-third of the then current fiscal year’s budgeted expenditures. That is, if the current fiscal year budgeted expenditures are six million dollars, the value of the fund should not exceed two million dollars.

6.2.5. Co-Mingling of Investments – The Strategic Initiatives and Investments Fund is to be invested separately from other investments (in one or more accounts) and may not be co-mingled with other investments.
6.3. AACRAO Endowment Fund

6.3.1. Purpose - The purpose of the Endowment Fund is to generate a permanent, steady stream of income (both restricted and unrestricted) for the Association.

6.3.2. Composition – The AACRAO Endowment Fund is comprised of a board-designated (“quasi”) endowment fund and donor-restricted endowment funds that were given in order to generate operating revenues for the Association. While it is anticipated that the large majority of the AACRAO Endowment Fund will consist of board-designated (“quasi”) endowment, donor-restricted funds such as the J. Douglas Connor Fund will also be part of the AACRAO Endowment Fund.

6.3.3. Distributions

6.3.3.1. Distribution Value - The AACRAO Endowment Fund shall annually distribute an amount less than or equal to five percent (5%) of the Fund’s average value as calculated in section 6.3.3.2. This distribution value shall be computed annually. Thereafter, distributions shall be made quarterly in an amount equal to one-quarter (25%) of the calculated distribution value, which is less than or equal to one and one-quarter percent (1.25%) of the AACRAO Endowment Fund’s average value. Distributions may be taken from principal or income. The distributions shall be made promptly following the close of each quarter. To the extent that it may legally do so, the Association shall interpret this policy as satisfying a gift provision that calls for retaining principal and distributing income.

6.3.3.2. Average Value – The average value of the AACRAO Endowment Fund is defined as the average of the fair market value of the fund as of the close of the preceding 12 calendar quarters. The Fund’s market value shall be based upon all assets in the Fund including principal and retained income, adjusted for all gains and losses, whether realized or unrealized, and determined as of the last business day of the quarter.

6.3.3.3. Initial Distribution – The initial distribution from the AACRAO Endowment Fund shall not be made until the fiscal year following the fiscal year in which the AACRAO Endowment Fund’s average value as calculated in section 6.3.3.2 reaches ten million dollar ($10,000,000).

6.3.4. Contributions – Contributions to the AACRAO Endowment Fund must be approved by the Board and will normally comprise 50% of those net revenues and unrestricted gifts designated by the Board for investment as well as donor-restricted funds that were given in order to generate operating revenue for the Association. The Board should evaluate whether new contributions can be made to investment funds at least once per fiscal year.

6.3.5. Minimum/Maximum Value - The AACRAO Endowment Fund should maintain a minimum value of one million dollar ($1,000,000). There is no maximum value for the fund.

6.3.6. Co-Mingling of Investments – The AACRAO Endowment Fund is to be invested separately of other investments (in one or more accounts) and may not be co-mingled with other investments.