You have been sent a copy of an advanced draft of the NARGS Investment Policy. A copy is also posted under About Us > Meetings > Board of Directors Reports.
At the Board meeting in Santa Fe, that the Investment Committee was directed to begin investing Restricted Funds in instruments comprised of 70% equities. Michael Riley has agreed to continue as chair of the Investment Committee.
The AdCom, with input from Michael Riley, has revised an old investment policy that Michael included in his report to the Santa Fe meeting. This Investment Policy sets policy for governing the Investment Committee and provides guidance for investment of NARGS funds. It is subject to the approval of the Board of Directors.
Once a Policy is approved, the Chair of the Investment Committee will have the authority to select members of the Committee subject to approval by the AdCom. The Committee can then make investment recommendations to the Treasurer. In preparation, NARGS is in the process of opening a Charles Schwab account. Based on the feedback, we propose to have a vote to approve a version of this Policy beginning February 27.
Your comments on the Policy are invited.
The policy is well constructed, logical and is consistent with the discussions and agreement we achieved in Santa Fe. I support it.
[In response to Don LaFond's suggestion, we sent information about the Strategic Plan and the Investment Policy to all of the candidates for NARGS office and invited their comments. Here are Dave Brastow's comments on the Investment Policy.]
As one of the candidates for the position of Treasurer, I feel compelled to comment on the proposed investment policy. I'm not allowed access directly to the Board Forum, even as only a reader, but was offered the opportunity to have my concerns posted for me. Thanks Ben.
I have studied the proposed policy, and I feel that it is not yet ready for "prime time". While I agree that a policy needs to be set forth, so that intelligent and consistent investments can be made, the framework of responsibilities is much too much a web of confusion. And too much authority is once again given to an ever smaller number of people.
The duties of the Treasurer in the policy are copied from the bylaws; however, if one reads further, it specifies that the Treasurer will also be responsible for making the investments. This is normally considered a separate profession from that of accounting. Under Operating Cash, the Treasurer is charged with "maintaining an adequate level of operating cash". If there is a cash shortfall, this gives the Treasurer the authority to liquidate assets without approval of any of the governing bodies.
The Investment Committee is comprised of a chair that is appointed by the President (without any approval), the Treasurer, and one to three others nominated by the person the President appointed. These additional members are approved by the AdCom, But wait; the AdCom consists of the President and Treasurer, along with the other two officers and the director-at-large who is selected by the AdCom's elected officers. There is a decided lack of independence in this scheme.
Approval of this policy is required by the Board of Directors, as are changes to it. However, once approved the committee recommends investments, and "direct(s) the Treasurer to make such investments." First, there is no Board nor AdCom approval needed at this point; and second, the Treasurer is part of the committee, thus directing his/her self; the phrase should be 'manage' the investments, as things are both bought and sold.
I again state that I feel that this document needs more discussion and rewording. Too much power is concentrated in too few people, creating the potential for abuse.
Dave Brastow - 26 February 2015
In response to Dave Brastow's comments regarding the proposed Investment Policy, I e-mailed the following:
Thanks for taking the time to make recommendations regarding the proposed NARGS Investment Policy. As you know, the purpose of the Board adopting a policy regarding the investment of NARGS funds is to provide required guidelines to be used by the Investment Committee. The responsibility of the Investment Committee, regardless of the composition of the committee members, will be to choose investments that met the requirements of the Investment Policy and serve the financial needs of NARGS.
As I am sure you are aware, the Board has the responsibility to adopt NARGS policies and it is the responsibility of the AdCom to carry out those policies. All members of the Board and those Board members serving on the AdCom are now elected by the NARGS Membership and they perform their duties and responsibilities as representatives of the Membership. The President has the responsibility, as stated in the NARGS by-laws, of appointing committees and, therefore, appoints the Chair of the proposed Investment Committee. The Treasurer is proposed as a committee member in order to facilitate communication with the Committee and to insure that investments selected by the Committee do not compromise the liquidity required to honor current or future anticipated obligations of NARGS. It is proposed that the additional members of the Investment Committee be chosen by the Investment Committee Chair with additional approval required by the AdCom. This additional approval is proposed so that the AdCom has the opportunity to evaluate the competency of additional members selected by the Chair and in order to insure that Committee is not biased in investment philosophy. The proposed Investment Policy requires that the Investment Committee provide a report annually to the Board and, at that point the investments will be evaluated and changes to the NARGS Investment Policy may be recommended if necessary.
If you have any further questions or concerns, just let me know,
Hi Board of Directors,
This discussion was called to my attention and I sure am surprised that this Investment Policy is being proposed for a vote. There is a lot of reference to an Investment Committee which to my knowledge does not exist. The ad hoc committee that was appointed by Peter George was dissolved upon completion of it's report last August. I was asked to review the Investment Policy by the AdCom and made some recommendations last fall but have heard nothing further. The discussion that I hear now seems to be all about "control" rather than function. If this is to be a Standing Committee with an ongoing function, then it might be appropriate for a President to appoint a Chairperson and that person might form a committee which could come to a consensus of opinion and make recommendations to the Board of Directors where the responsibility lies. The Board could then make decisions for the AdCom to implement. There doesn't seem to be any reason for the AdCom to micromanage the function of this or any committee.
I hear questions about the definition of Restricted and Unrestricted Funds. The parameters and purposes need clarification and have been subject to manipulation in the past. The stated percentages in the Policy for Unrestricted Funds have been altered and are not consistent with recommendations by wealth management professionals and the statement saying that "The Board of Directors has directed the Investment Committee to choose instruments so that 70% of Restrcted Funds will be invested in equities." is simply not true as recorded in the minutes of the Santa Fe meeting.
The sad thing is that although the Board of Directors did take responsibility and action in Santa Fe with Janet Novak's motion, nothing has been done. The action recommended by the ad hoc committee was to balance the budget but not only did that not happen in 2014, another huge deficit is proposed for 2015. The amount remaining to be invested will not be sizable enough to generate income for any purpose and will be nonexistant in a very few years.
This message may or may not post since I'm not even on the board and wondering why I have access to this Forum? - Michael
Michael is correct. The minutes of the Santa Fe meeting state "60% of restricted funds shall be invested in equities in
the form of diversified low cost mutual funds chosen by the investment committee by October 1 and invested by the treasurer by January 31." Not the 70% as stated in the version of the Policy you received.
I am no doubt responsible for this transcription error.
I didn't assume that you made that change in percentage but did consider that perhaps it might be one of the negotiated changes made by the AdCom. The policy proposed has no doubt been discussed behind closed doors by the members of the AdCom, probably at great length. When the Board reduced it's size by eliminating Chapter Chairs, it was because someone felt that discussions among the larger group were unmanageable. So now that they are manageable, where is the discussion by the 15 or so Directors - the apathy is deafening?
Why is it proposed that the AdCom vet the composition of the Investment Committee to judge their competency? The Investment Committee, as all committees, serves as an advisory to the Board of Directors - the body of the committee has no power to implement transactions. As for the committee reporting the performance and value of the investments - that can be done on a daily basis. We are talking about investments in instruments such as Stock and Bond Funds which settle at the close of each day. Investment houses issue monthly reports and with Internet access, the performance and valuation can be viewed daily.
When an account is established, it usually carries the authority of the President, Secretary and Treasurer with one of those designating as having "trading authority" to make transactions. I would not participate in a Investment Committee that had to operate under the mechanisms proposed by the AdCom. Perhaps the President needs to issue a wake-up call to the Directors and remind them of their responsibility for this organization and it's finances?
[This is Dave Brastow's reply to Bill Adams.]
Thank you for your reply. However, even the expanded explanation of the roles each entity would play does not change my opinion that there are too few players, and too tightly intertwined, for the good of the society. The Treasurer should be outside the committee, I feel. There ought not be any difference in communication, whether the Treasurer is on the committee or not. This would provide a better 'check and balance' situation.
Since these investments will be the lifeblood of the Society, special care must be afforded them. Perhaps the Board should be involved with approving the additional members.
I feel that 'annual' reports are not adequate. They should be no less frequent than quarterly, and perhaps there could even be a site, file, or forum topic where running records of investment transactions are recorded and the investments current values. Again, this would help dispel any notion of secrecy.
And while we are on the subject, there are many people I have talked to that feel left in the dark as to what is transpiring at the National level. Two of these people are elected board members, who have had no input into this policy document nor in fact knew that it was forthcoming at this time. Prior to the creation of the Board Forum (an idea I floated at the Santa Fe meeting), there was no real way to carry out a discussion. Too bad you didn't implement this before eliminating 2/3s of the Board; maybe you wouldn't have had to disenfranchise so many people and add to the notion of a secret society. We are supposed to be running meetings under the Robert's Rules of Order, where there is a discussion phase. The recent bylaws change didn't have a discussion; inviting members to send comments, and having one person reply is not a discussion. On that grounds alone, the bylaws change should be null and void.
And it isn't just at AdCom or BoD levels that communications are lacking. I know several people who are members of Committees, that haven't heard one word regarding their committees. And two of the three committees that are supposed to be standing committees are not at this time even in existence (Audit and Nominating, according to our own website). Why not list the specific need of volunteers in the Quarterly and on our website.
Connections are what are lacking. Caused by the lack of distributing information and follow through. I know that this is being worked on, but it takes hard work to get things rolling after a long period of inactivity. People have to be encouraged. They have to be assigned tasks, and then asked how things are going and what help or information they could use to make things more workable. The more sharing, the more openness, the better the Society will function.
I don't think that anyone is evil, or planning anything nefarious. I do think that people are working for the betterment of the Society. But I do think the Society will fail if we don't make the effort to be inclusive rather than continuing the trend of exclusivity. Before taking punitive actions against chapters for not having all their members join the parent society, find out why they aren't joining. Make changes so that everyone will want to join. I think you all need to hear this, as you may not be getting this feedback due to other people not communicating with you.
Dave Brastow, member
Please be aware that, as stated in the NARGS By-laws, "all the Committees except the Nominating Committee, Audit Committee and Audit Committee are tacitly Ad Hoc serving at the pleasure of the President". Although the President could choose to establish committees that would provide advice to the Board, our current committee structure is designed primarily to assist the AdCom in administering or implementing NARGS programs or serving to fulfill committee duties as defined in the NARGS by-laws.
You will also find that the Investment Committee, as defined in the proposed Investment Policy, is not an advisory committee but rather a committee charged with the responsibility of selecting investments, following the guidelines detailed in the Investment Policy, that will be used to invest available NARGS funds. No further approval is required and, when the appropriate investments are selected by the Investment Committee, the Treasurer is instructed to execute the recommended transactions.
Your first statement implies that there is no ongoing need for an Investment Committee as an Ad Hoc. Since we have been coasting along on that basis, look where it has led us financially? Hence, my statement that you guys have the cart before the horse and first, you need to establish the need for a committee before you devise a policy to set it's objectives. Perhaps it is time for a change?
Your second statement is exactly what is wrong with the Investment Policy as it stands. An advisory committee composed of volunteers who are likely not even Directors can hardly assume any responsibility for making financial decisions - nor can the Treasurer or AdCom for that matter. The ultimate responsibility for the financial state of the organization is on the head of the Board of Directors.
I am posting on this forum as the Elected Director who is currently serving on AdCom. These comments are in response to the comments made by Michael Riley and Dave Brastow. I have served as a member of boards and committees for several non-profit organizations and am aware of that it is difficult to find qualified and conscientious individuals to serve on volunteer committees. I believe NARGS is fortunate to have an excellent set of AdCom members. Since the Santa Fe Annual Meeting, the AdCom members (especially Ben Burr and Bill Adams) have worked to put prepare an annual operating budget (it may not be balanced, but it recognizes that there are no easy or immediate answers) and an investment policy that serves the society’s needs. The proposed investment policy was designed to comply with the objectives stated by the board at the Santa Fe meeting, to provide a responsible level of oversight, and to avoid getting bogged down with time-consuming, procedural complexity. As reflected by Michael’s and Dave’s comments, the larger the group is that is developing a policy, the more difficult it is to reach closure and move forward. I encourage the board members to read the proposed policy and vote for its approval so we can move forward. Thanks, David White