Reports: Investments/Financial:

Archives Partnership Trust Investment Policy and Guidelines

Adopted:


November 19, 1998

Amended:


May 7, 2003
January 31, 2006
October 11, 2006
March 28, 2007
October 8, 2009
March 25, 2010
October 2, 2011
February 2, 2012


October 15, 2013

1.        Purpose:

a)     The purpose of this Investment Policy and Guidelines is to establish a clear understanding of the philosophy and investment objectives for the endowment of the New York State Archives Partnership Trust (Trust) and the standards to be employed by the Investment Committee and the endowment custodian to monitor investment performance

b)    This Investment Policy demands adherence to a long-term goal of balancing short-term distributions in support of the needs of the Trust operations and projects with preservation of the real, inflation-adjusted value of endowment assets.

2.         Scope:  This Investment Policy and Guidelines applies only to those assets commonly referred to as the Endowment Fund

3.        Fiduciary Duty: 

a)     Investments by the Trust will be made in accordance with the provisions of §7(3) of the Archives Partnership Trust Act as amended by Chapter 399 of the laws of 1998 as follows: “Monies in the endowment account and earnings thereon may be invested and reinvested by the Trust Board consistent with the prudent investment standard of Section 11-2.3 of the Estates, Powers and Trust Law and pursuant to the provisions of Section 2925 of the Public Authorities Law.  The Trust Board shall give due consideration to balancing the long-term growth of the endowment, long-term trends of the economy and the needs of Trust operations in the State Archives with the goal that the endowment shall provide a permanent, growing and viable source of funds to fulfill the Trust purposes.”

b)    Investments will also be made in accordance with the provisions of the New York Prudent Management of Institutional Funds Act (NYPMIFA), Article 5-A of the Not-for-Profit Corporation Law.  In seeking to attain the investment objectives set forth in this policy, the Investment Committee shall exercise prudence and appropriate care in accordance with the NYPMIFA which requires that those responsible for managing an institutional fund “manage and invest the fund in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.”

c)     Standard of Prudence:  NYPMIFA requires consideration of the following factors, if relevant, in managing and investing institutional funds:

  • General economic conditions
  • The possible effect of inflation or deflation
  • The expected tax consequences, if any, of investment decisions or strategies
  • The role that each investment or course of action plays within the overall investment portfolio of the endowment
  • The expected total return from income and the appreciation of investments
  • Other resources of the Trust
  • The needs of the Trust and the endowment to make distributions and to preserve capital
  • An asset’s special relationship or special value, if any, to the purposes of the Trust.
d)    In addition, NYPMIFA requires that the Trust may incur only those costs that are “appropriate and reasonable in relation to the assets, the purposes of the [Trust], and the skills available to the [Trust],” and must make a reasonable effort to verify facts relevant to the management and investment of the Trust’s endowment funds.

 

4.        NYPMIFA provides for delegation of management and investment of an institutional fund to an external agent or to an organization’s committee, officers, or employees. 

a)     The Trust Board’s responsibility for administration of the investments is delegated to the Board’s Investment Committee, which shall make decisions concerning the investments and report to the Trust Board consistent with these this Investment Policy and Guidelines.

b)    Should the Trust Board choose to delegate administration of the investments to an external agent, NYPMIFA requires that the Board must act in good faith, with the care than an ordinarily prudent person in a like position would exercise in: 

i)     selecting, continuing or terminating an agent, including assessing the agent’s independence including any conflicts of interest such agent has or may have;

ii)    establishing the scope and terms of the delegation, including the payment of compensation, consistent with the purposes of the Trust and the Trust’s endowment fund; and

iii)   monitoring the agent’s performance and compliance with the scope and terms of the delegation.

5.        Authorized Financial Institutions:  The Investment Committee shall be responsible for evaluating the creditworthiness and financial position of financial institutions and dealers, for selecting from among those they have determined appropriate for the Trust’s investment purposes, and if applicable, establish appropriate limits on the amount of investments that can be made with each financial institution or dealer.  Any or all of the following criteria may be used in evaluating and selecting financial institutions and dealers: reputation for quality and reliability, years and amount of experience, prior transactions with the Trust, ratings given by nationally recognized rating organizations, and independence, including any conflicts of interest.  The endowment custodians shall at all times have insurance in favor of the Trust against malfeasance for at least twenty-five million dollars.

6.        Spending policy: 

a)     Spending is defined as funds made available from the endowment for Trust operations and/or programs.

b)    For endowment funds established prior to September 17, 2010, the date NYPMIFA went into effect, the Trust may not appropriate more than the historic dollar value (HDV) of any donation to the endowment unless the donor provides written intent to allow expenditures greater than the HDV.  For endowment funds established on or after September 17, 2010, the Trust may appropriate as much of an endowment fund as the Trust determines subject to the intent of the donor expressed in the gift instrument and is prudent for the uses, benefits, purposes and duration for which the endowment fund is established.  NYPMIFA provides the following factors be considered, if relevant, when making decisions on expenditures from endowment funds:

  • Duration and preservation of the endowment fund
  • Purposes of the Trust and of the endowment fund
  • General economic conditions
  • Possible effect of inflation and deflation
  • Expected total return from income and the appreciation of investments
  • Other resources of the Trust
  • Where appropriate and circumstances would otherwise warrant, alternatives to expenditures from the endowment fund, giving due consideration to the effect that such alternatives may have on the Trust
  • Investment policy of the Trust

c)     The minutes of any meeting of the Trust Board or Board committee where decisions to expend (or to accumulate rather than expend) from the endowment account will include consideration of each of the above factors.

d)    To implement the statutory standard, the Trust Board shall annually at its budget meeting determine the percentage of the endowment that may safely be withdrawn to balance the operational needs of the trust and ensure the future growth of the endowment.  In making such determination, the Trust Board will inform itself of such percentages used by prominent educational and other endowment funds and shall take a multi-year view of the proper percentage.  Accordingly, in any one year, withdrawal may exceed the growth in the endowment for that year, or may be less than the annual growth in the endowment reduced by a standard guide of inflation such as the consumer price index.

e)     The amount of endowment earnings to be used annually to advance the Trust’s mission shall be  a maximum of 5.0% of the average endowment’s fair market values determined quarterly and averaged over a period of 5 years (20 quarters) immediately preceding the year in which the appropriation for expenditure is made, with the expectation that after fundraising less than 5.0% will be withdrawn, and with the provision that unless permitted by donors or NYPMIFA, the amount used will not cause the endowment fund to fall below the historic dollar value of the donations to the endowment fund.

7.        Implementation of the Investment Policy:  Decisions made by the Investment Committee when implementing the investment portfolio are to be guided by NYPMIFA.

8.        Diversification: 

a)     It is the policy of the Trust, to the extent practicable, to diversify its deposits and investments by investment instrument and by maturity.  The cash flow requirements of the endowment and the Special Projects Account will be the primary determining factor in selecting investment securities. Distribution of necessary cash, pursuant to the approved budget, shall not compromise the balance and diversity of the investment portfolio.

b)    The diversity of investments shall be reviewed at each meeting of the Investment Committee, along with a review of investment performance, pursuant to this Investment Policy and Guidelines.

c)     NYPMIFA requires that the Trust’s investments be diversified unless the Trust prudently determines that because of special circumstances, the purposes of the Trust’s endowment account are better served without diversification; and that the Trust review a decision not to diversity its endowment account as frequently as circumstances require and at least annually.

9.        Permitted investments of the Trust endowment shall be as follows:

a) Equities:  The equity component may include open end or closed end mutual funds, individual securities, or exchange traded funds.  Equities shall be diversified by equity class, by domestic and international positions, and sector (e.g., utilities, industrials, technology, etc.).  It is anticipated that equities will be weighted toward larger capitalization companies due to their inherent lower risk.  However, it will also be prudent to hold positions in the mid and small capitalization styles.

b) Certificates of Deposit:  Certificates of deposit shall be insured by the Federal Deposit Insurance Corporation, the Savings Association Insurance Fund, or the Bank Insurance Fund.

c) Bonds: 

i) Individual Bonds:  Corporate, municipal, or state bonds rated A or better by Moody’s and Standard & Poor’s rating services or United States Government bonds.  If after purchase a bond’s rating falls, the Investment Committee will discuss whether the bond’s yield, in conjunction with its new rating, warrants retention or should be sold.

ii) Bond Funds:  Bond funds that invest in a diversified portfolio of U.S. Government, Agency, corporate, or dollar-denominated international issues are permitted. Bond funds purchased after February 2, 2012, must hold 100.00% of assets at investment grade (rated Baa / BBB or better by Moody’s and Standard & Poor’s rating services) at the time of purchase.  If after purchase a bond fund’s assets at investment grade fall below 100.00%, the Investment Committee will discuss whether the bond fund’s yield and credit quality warrants retention or should be sold.

d) Money Market Fund:  Money market funds meeting the Trust’s investment guidelines.

e) United States or New York securities having the full faith and credit of the United States or the State of New York.

10.      Of the permitted investments, the certificates of deposit are collateralized (see Section 5.c b. above).  The equities, bonds, and money market, while not collateralized, are necessary investments to achieve a balance of growth and security.

11.      The following shall not be permitted investments of the Trust endowment:  direct ownership of repurchase agreements.

12.      The specific investments to be selected shall be selected by the Investment Committee of the Trust Board.  The Investment Committee shall meet at least quarterly and it shall maintain written minutes of its deliberations.  Copies of its minutes shall be distributed by the Assistant Treasurer within ten business days of any meeting to each member of the Trust Board.  The Investment Committee and the Assistant Treasurer shall obtain monthly statements of the total value of the endowment and the value of each security or mutual fund contained in the endowment.  A copy of the monthly statement shall be sent to each member of the Trust Board within 30 days of the close of the month. 

13.      The Trust annual report shall provide an investment report, which shall include the trust investment guidelines, including any amendments thereto, an explanation of the investment guidelines and amendments, the results of an annual independent audit of conformity to the investment guidelines, the investment performance of the endowment, a list of the total fees, if any, for commissions or other charges paid to any investment banker, broker, agent, dealer or advisor rendering investment-associated services to the Trust in the year covered by the report.

14.      A copy of the annual report shall be sent to the Governor, the Board of Regents, the President of the University of the State of New York, the Comptroller of the State of New York, the Majority Leader of the Senate, the Speaker of the Assembly, the Minority Leader of the Senate, the Minority Leader of the Assembly and the Chairs of the Senate Finance, the Assembly Ways and Means Committees, the Division of the Budget, and donors of gifts to the Trust.

15.      A transaction shall be defined as the initiation of the purchase or sale of a security by the Investment Committee as permitted by these Investment Guidelines.  The redemption of an investment upon reaching its maturity or due to being pre-refunded (called) by the issuer, shall not be considered transactions requiring Investment Committee authorization. The withdrawal of funds pursuant to the Board-approved budget or of funds deposited to the endowment’s money market account pursuant to paragraph 17 of these Guidelines, shall not be considered transactions requiring Investment Committee authorization.  The Investment Committee has the discretion to decide whether equity mutual fund and/or bond mutual fund dividends and/or capital gains shall be automatically reinvested or paid as cash.

16.      All transactions with the endowment custodian shall be either on:

a)     resolution adopted by a majority of the Investment Committee in the course of its meeting,

b)    written approval or instructions signed by a majority of the members of the Investment Committee, or

c)     emailed approval or instructions from a majority of the members of the Investment Committee.

17.      All withdrawals (by check or electronic transfer) from the endowment account of funds pursuant to the Board-approved budget or of funds deposited to the endowment’s money market account pursuant to paragraph 17 of these Guidelines shall be made payable to the “New York State Archives Partnership Trust” and be mailed or electronically transferred to and deposited in the operations account maintained by the State Comptroller or in the special project account maintained by the Archives Partnership Trust as directed by the Executive Officer of the Trust.  The Trust shall additionally maintain a money market account for the processing of credit card transactions and shall establish, as needed, money market accounts for Special Project grants, pursuant to Section 16 of these Investment Guidelines, where the grantor requires the tracking and possible repayment of interest earned on the principal of the grant.

18.      Gifts to the Trust for endowment purposes shall be sent to the endowment custodian for deposit in the endowment’s money market account.  Deposit transactions shall not require signatures, but all checks shall have the Trust endorsement stamp. 

19.      Gifts to the Trust which are received in securities shall be delivered (or transferred) to the endowment custodian who shall immediately sell the securities and deposit the proceeds in the endowment’s money market account.

20.      Gifts to the Trust for operations or for specific projects shall be handled in one of two ways.  If no short-term need for the funds exists, the gift may be sent to the endowment custodian for deposit in the endowment’s money market account until such time as the funds are needed for operations or special projects; otherwise the monies will be deposited directly into the Trust’s Special Projects Account for the benefit of the Trust or the Trust’s Operations Account (in the custody of the State Comptroller) as determined by the Executive Officer of the Trust. 

21.      The Trust Board and Executive Officer shall ensure that special project funds are expended in accordance with donor restrictions and requirements.

22.      The Legislature recognized that neither the prudent investment standard found at §11-2.3 of the Estates Powers and Trusts Law nor §2925 of the Public Authorities Law is directly applicable to the circumstances of the Trust.  Accordingly, the Legislature only required that the Trust manage its endowment consistent with those two sections.  In the opinion of the Trust Board, the investment guidelines are consistent with those statutes and the Trust act.  The New York Prudent Management of Institutional Funds Act applies to both the management of the Trust’s endowment and to its relationship to its donors.  The Trust’s Investment Policy and its procedures for fundraising, gift acceptance and donor agreements have been revised to reflect the requirements of NYPMIFA.

23.      These Investment Guidelines shall take effect immediately.

RESOLVED, that the Trust Board delegates to the Investment Committee the selection of an investment advisor and custodian with the qualifications, reliability, experience, capitalization, and staff to satisfactorily act as investment advisor and endowment custodian of the Trust endowment and to select a money market fund which meets the Trust’s investment guidelines.

RESOLVED, that the Chair and the Executive Officer of the Trust, or either of them, is hereby authorized to execute the following agreement, or one substantially consistent with it, with the State Comptroller to ensure effective utilization of the operations account maintained with the State Comptroller:

“Memorandum of Understanding dated this           day of                     , 1998 by and between the Comptroller of the State of New York and The New York State Archives Partnership Trust (“Trust”).

The Trust was created by Chapter 758 of the Laws of 1992, as amended. Pursuant to Chapter 399 of the Laws of 1998, the Trust endowment account and project account will be transferred to the custody of the Trust Board on November 22, 1998 while the Trust operations account will remain with the Comptroller.

In order that the Comptroller shall have sufficient moneys available when vouchers and payrolls charging the Trust are presented for payment, there shall be transferred to the Comptroller at the beginning of each quarter (on a fiscal year basis) to the credit of the Trust Operations Account (Comptroller's Fund No. 024, subfund 03) sufficient amounts to fully fund along with State appropriations the projected quarterly disbursements from this account as approved by the Trust Board in its annual budget.

The Trust will maintain its account in good standing. If for any reason quarterly disbursements exceed cash on hand, the Trust will, within no more than 10 days, or at such lesser period as required by the Comptroller, deposit sufficient funds to fully cover expenses

RESOLVED, that the Chair is hereby authorized to execute such vouchers and other documents necessary to effectuate the transfer of the Trust Endowment to the Trust in accordance with the Trust’s Investment Guidelines.