Resolution FIN 039

Resolved, That the dividend rate for 2024 for the DFMS Trust Fund portfolios available to support the operating budget of DFMS be set at $1.28 per share based on 5.0% the average yearend market values of the portfolio for the five years ending 2022; and be it further

Resolved, That the dividend rate for 2024 for Trust Funds in the DFMS Endowment Portfolio that are not available to support the operating budget of DFMS be set at $1.28 per share based on 5.0% the average yearend market values of the portfolio for the five years ending 2022.

 

This appropriation from the endowment continues the budget adopted by the General Convention for the 20232024 biennium which reflected a dividend rate of 5.0%. 

The formula is consistent with standards of prudent fiduciary conduct in the management of endowment funds and with general practice among university, foundation and other non-profit endowment funds.

 

Year Ending 12/31	Endowment Year-End $ Market Value	Year-End $ Value per Share	5-year average $ Value per Share	$ Payout per Share
2011	$284,121,180	$17.81	$19.877	$1.09
2012	$311,816,630	$19.30	$18.876	$1.09
2013	$364,917,861	$22.32	$17.919	$0.94
2014	$374,505,896	$22.56	$19.346	$0.89
2015	$355,969,542	$21.29	$20.654	$0.96
2016	$365,914,910	$21.32	$21.355	$1.01
2017	$448,897,531	$24.34	$22.364	$1.03
2018	$415,504,874	$21.54	$22.208	$1.06
2019	$506,305,956	$25.06	$22.708	$1.11
2020	$587,473,257	$28.79	$24.209	$1.11
2021	$649,394,321	$30.27	$26.000	$1.13
2022	$518,919,302	$23.33	$ 25.80	$1.21
2023				$1.30
2024				$1.28

In making this appropriation, the following factors were considered in accordance with the New York Prudent Management of Institutional Funds Act.

1. FIN noted that the endowment is of perpetual duration and that the current need to support operations must be balanced against the need for funds in the future.
2. FIN notes that the applicable gift instruments allow this endowment to be used for operations.
3. FIN discussed revenue expectations and general economic conditions that led to the recommendation that the funds be appropriated from the endowment.  FIN also discussed the current investment market conditions and believes that its policy of using past market values is prudent.  In February 2011, it was agreed that future dividends would be calculated based on the market average of the endowment using the five years ending on December 31^st of the year preceding the adoption of any subsequent budget.  This would eliminate the uncertainty of forecasting portfolio values prior to the completion of a year. 
4. FIN discussed the effect of inflation and deflation on the purchasing power of the endowment.  FIN observed that while inflation escalated during much of the last 12 months, it has slowed in the last few months; has been modest in the past decade; that forecasts for the next year suggest minimal, if any, growth; thus price inflation will remain contained.
5. FIN particularly noted that the trust funds have returned nearly 8% annually since 2012; and inflation has averaged 2.6% annually.  This relationship confirms that the purchasing power of the portfolio has been maintained while using annual dividends of approximately 5.0%.
6. FIN discussed the Treasurer’s report on the performance of the endowment.  Through August 2023, the endowment has returned 7.9% annually over the last 10 years. The Investment Committee has maintained an asset mix that it considers prudent to ensure long-term returns.
7. FIN discussed the possibility of using other sources to fund current operations.  The Executive Council made extensive use of the Society’s short-term reserves between 2004 and 2012; but in 2017 agreed a goal of maintaining reserves adequate to fund at least three months of normal operations     
8. FIN discussed how management has identified savings and curtailed costs in recent years when necessary.
9. FIN also reviewed the revised investment statement policy (IPS) that was previously approved by the Executive Committee at a meeting earlier in 2023.
10. FIN finally noted that the budget for the 2023-2024 adopted by General Convention reflected a dividend payout rate at 5.0% annually.