ACEF

Delegates heard from Mark Gabrellian, who described the theory behind the Armenian Church Endowment Fund.

"The theory is to create a certain degree of certainty, so you know what you will receive from year to year," he said.

This year the market value of ACEF grew $9.2 million with increase in new endowments and reinvested interest earnings, $3.1 million in income was distributed to beneficiaries, which include the Diocese, parishes, St. Nersess Seminary, and the Fund for Armenian Relief.

Individuals or parishes can establish an endowment fund to benefit any Armenian Church related charity. The principal invested can never be touch, rather beneficiaries receive 4.5 percent of the principal as an annual payment. Any interest earned over the 4.5 percent is reinvested in the fund, growing the principal. That enables ASEF to distribute money even if the market goes down in a given year.

"The idea of an endowment fund is to have a pool of money available for you, the beneficiary, that is going to last in perpetuity. The principal is not to be touched, so you get the benefit of an income stream that will last from year 1 to 2 to 10 to 20," he said. "ACEF is a long-term proposition. You have the responsibility of ensuring the long-term financial health of your parish and organization."

42 percent of ACEF endowments benefit the Diocese, 29 percent benefit individual parishes. Since 2003, ACEF distribution to beneficiaries has grown from $2.47 million to $3.49 million. Part of that growth is new endowment funds being created, the other is the increased return achieved by ACEF investments.

“We are constantly looking at the portfolio and trying to see if we are achieving the benchmarks we want to achieve. We’re conservative because we’re dealing with other people’s money. Our approach is going to be a conservative one whose purpose is slow, steady growth year by year,” he said.

Parishes and individuals that establish funds with ACEF benefit, he said, because of the size of ACEF gives it access to successful funds small investors cannot get into.

Delegates asked Gabrellian about ACEF’s policy to distribute 4.5 percent of the principal, seeing as current market performance has been so successful. Gabrellian said the policy has been reviewed, but was rejected because there are always variations in the market and that there will be years when the market is down and years it is up. Before the 4.5 percent policy, ACEF distributed based on annual market performance and ran into trouble to guarantee an annual income flow.

“Part of what we’re doing is to force a certain amount of discipline. It’s very easy to change the amount distributed, but we have to say no. It’s important for us to say no and to have a set policy,” he said. “This distribution policy is a concept that has been used successfully by funds throughout the country.”

More information on ACEF can be found on its website, www.armenianchurchendowmentfund.org.

Posted by Jake at May 3, 2007 04:11 PM