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THE FINANCES OF THE ROTARY FOUNDATION FISCAL 2009-10

THE FINANCES OF THE ROTARY FOUNDATION FISCAL 2009-10. RRFC INSTITUTE February 2011. OVERVIEW. Rotary Finance Overview Revenues and Spending Net Assets and Operating Reserve TRF Investments Results 30-Nov-2010. TRF’s Finance Organization. *Coordinates with RI Audit Committee.

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THE FINANCES OF THE ROTARY FOUNDATION FISCAL 2009-10

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  1. THE FINANCES OFTHE ROTARY FOUNDATIONFISCAL 2009-10 RRFC INSTITUTE February 2011

  2. OVERVIEW • Rotary Finance Overview • Revenues and Spending • Net Assets and Operating Reserve • TRF Investments • Results 30-Nov-2010

  3. TRF’s Finance Organization *Coordinates with RI Audit Committee

  4. Rotary International The Rotary Foundation Rotary’s Finances • Revenue Sources • Dues • Services & Other Activities • Investment Income • Revenue Sources • Contributions • Investment Income Expenses Related to Dues Related to Services & Other Activities • Expenses • Program Awards • Program Operations • Fund Development • Administration

  5. Rotary International The Rotary Foundation Financial Governance RI Board of Directors - Treasurer - RI Finance Committee – Standing Committee TRF Board of Trustees - TRF Board Finance Committee - TRF Investment Advisory Committee Standing Committee - Stewardship Committee RI Audit Committee covers both RI & TRF Oversight by RI Operations Review Committee

  6. Revenues and Spending 2009-10 Results And 10 Year Trends

  7. The Rotary Foundation2010 Financial ResultsUS$(millions) Revenues $322.8 Expenses $226.6 Increase in Net Assets $96.2 Investment Earnings $54.3 General Admin $5.2 Fund Dev $16.5 Contributions $268.5 Program Ops $17.9 Program Awards $187.0

  8. The Rotary Foundation Revenue TrendsUS$(millions) Net Investment Losses

  9. The Rotary Foundation Contribution Revenue TrendsUS$(millions) ____PEFC____

  10. The Rotary Foundation2009-10 Designation of ContributionsUS$268.5 million

  11. Program Operations Scholarship and grant administration for EP, HP and PP programs as well as support for Rotarians who implement international activities. • Fund Development Personnel services, communications, public relations, supplies, computer support, legal counsel and recognition (ranging from awards to events). • General Administration Personnel services, communications, computer support, audit fees, Associate Foundations and Trustee services (administrative support, travel, meetings and committees). The Rotary Foundation Expense Categories

  12. What the Foundation Spent in 2010US$226.6 million

  13. 90% The Rotary Foundation Total Awards & ExpensesUS$(millions)

  14. The Rotary FoundationTrends in Awards & OpsUS$(millions)

  15. The Rotary FoundationPermanent Fund SpendingUS$(millions)

  16. PolioPlus Program Since Inception through June 2010Total Revenues of $1,176 billion

  17. The Rotary FoundationTrends in Program Operations Expenses – by program(in $millions)

  18. The Rotary FoundationTrends in Total Operating Expenses –by Activity(in $millions)

  19. Net Assets and Operating Reserve

  20. Net Assets at 30 June 2010US$657.5 million

  21. Rotary Foundation Net Assets(in $millions) Net Assets increased over US$95 million 30 June 2009 US$562 million 30 June 2010 US$657 million

  22. Annual Programs Fund Net Assets(in $millions) Net Assets increased over US$19 million 30 June 2009 US$310 30 June 2010 US$329

  23. The Rotary Foundation Net Assets US$(millions)

  24. The Rotary FoundationAnnual Programs Fund by Component(in $millions)

  25. The Rotary Foundation Earned Income Reserve Balance at Year End(in $millions)

  26. INVESTMENTS

  27. Trustees’ Responsibilities • Formulate investment policies • Develop investment objectives • Establish asset allocation strategies

  28. Investment Advisory Committee • 9 members, of whom 6 are Rotarians with professional investment experience; 6-year terms • Responsibilities: • Review and monitor investment results • Recommend changes to investment policy and structure, as appropriate • Recommend and approve hiring and termination of managers • Advise Trustees on investment matters

  29. Investment Consultant • NEPC was appointed by TRF and RI effective 1 December 2009. • Edward O’Donnell, CFAKristin Reynolds, CFA, CAIA • Consults for RI General Fund, APF, and PF. • Annual full-retainer fee of $275,000 plus out-of-pocket expenses. • RI’s cost is estimated at $40,000

  30. Investments at 30 June 2010US$670.6 million* *NOTE: These assets do not include short-term cash or contributed securities, therefore these figures will not tie to the Financials

  31. Changes to APF & PF Investment ProgramsCalendar Year 2010 • Hired new investment consultant with more expertise in endowment and foundation funds • Modified policy asset allocations to reduce equity risk and volatility of returns • Added real assets to provide protection against inflation • Terminated 5 managers and appointed 8 new managers • Established operating reserve and completed initial funding of US$20 million

  32. Evolution of APF InvestmentsTarget Asset Allocations

  33. Annual Programs FundAsset Allocation Comparison Prior Asset Allocation New Asset Allocation

  34. Annual Programs FundCurrent Policy Asset Allocations

  35. Annual Programs Fund - Phase IBuilding Operating Reserve Programs Operating Reserve

  36. Annual Programs Fund - Phase II> 50% Funded Operating Reserve Programs Operating Reserve

  37. TRF - Annual Programs Fund Investment Returns

  38. Evolution of Permanent Fund InvestmentsTarget Asset Allocations

  39. Total Fund Asset Allocation – Permanent Fund Prior Asset Allocation Current Asset Allocation

  40. Permanent FundCurrent Policy Asset Allocations

  41. Permanent Fund Spending Rates

  42. TRF Permanent Fund Investment Returns

  43. TRF PolioPlus Fund* Investment Returns * Excludes Gates Gift

  44. THE ROTARY FOUNDATION RESULTSFOR THE FIVE MONTHS ENDED30 November 2010

  45. The Rotary FoundationContribution TrendsTotal Contributions for the Five Months Ended 30 NovemberUS$ (thousands)

  46. The Rotary FoundationNet Investment ReturnFor the Five Months Ended 30 NovemberUS$ (thousands)

  47. The Rotary FoundationExpense TrendsTotal Awards and Expenses for the Five Months Ended 30 November US$ (thousands)

  48. Here is the way to quickly access financial information for both Rotary International and The Rotary Foundation: • Go to Rotary’s website: http://www.rotary.org • Click on the first tab - “About Us” and you will see another tab - “Financials” • Click on “Financials” and you will see general financial information and a menu with several options that include Rotary’s investment philosophy, Frequently Asked Questions (FAQ) and Download Documents.  • If you click on Download Resources, you can find RI’s and TRF’s financial statements, annual reports, government filings and more.

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