What is the ideal way to allocate the charitable assets in your JCF donor advised fund?
Michael Miller, Co-Founder and Managing Director of the independent advisory firm Colonial Consulting, LLC, addressed this important question at a recent breakfast seminar on JCF’s Robust Investment Options.
First, he highlighted the 23 carefully selected, best-in-class investment options on JCF’s platform. These include short-term fixed income offerings that serve as “default” investments; bond funds, including Israel Bonds; equity funds, including two international options; and privately managed investments.
Recent additions to the JCF investment platform include:
- Market Vectors Israel ETF, which invests in Israeli companies trading on the Israeli and U.S. stock exchanges.
- Israel Bonds
- BlackRock World Government Bond Index
- T. Rowe Price Institutional Floating Rate Fund
JCF’s goal is to provide fund holders with maximum choice when it comes to investing charitable assets, and give fund holders the opportunity to potentially grow charitable assets tax-free. Where available, JCF invests into an institutional class of shares with lower expense ratios, which helps to improve long-term investment performance.
To best allocate your fund’s assets, it is critical to evaluate your risk tolerance, Mr. Miller said. This is governed by three key aspects:
- Plans for Annual Giving:How much money do you plan to donate to charity from your JCF fund each year? What percentage does this annual giving represent of your total fund assets?
- Time Horizon: When you have a very long time horizon, you have more flexibility as to the different investment strategies that you can pursue. If you intend to spend down your fund in the next few years, however, you will want to invest your assets more conservatively to ensure that funds are available to meet your immediate philanthropic goals.
- Psychology: It’s important to be as honest with yourself as possible. If seeing your fund balance drop will provoke panic, you may be better off taking on less risk.
Mr. Miller shared his market outlook for 2014 (global growth and confidence are improving!) and encouraged fund holders to keep risk consistent.
Below are sample portfolios he shared that are designed for aggressive, balanced and conservative approaches to asset allocation.
(Click the image to enlarge).
