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Risk, return, and justice

The Common Endowment Fund pools congregational assets in a fund that reflects UU values.
By Michelle Bates Deakin
Spring 2013 2.15.13

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Phil Murray

Phil Murray, who has spent his career in public accounting, investment management, and financial analysis, has worked with the UUA since 2009. He provides oversight of the administration and accounting of the Common Endowment Fund. A member of First Parish in Needham, Mass., Murray said, “For nonprofits, the professional oversight of their endowments is critical to make sure the organization is around in perpetuity.”

Once every three months, representatives of between 30 and 40 Unitarian Universalist congregations join a conference call to review their investment portfolios.

The congregations are all members of the Unitarian Universalist Common Endowment Fund (UUCEF), a pool of investments that in­cludes not only the UUA’s endowment fund but also the endowments of 237 congregations and the trust funds of 125 congregations. It also includes en­dow­ments of some related organizations, such as the UU Urban Ministry.

The fund removes the burden of managing complex financial assets from the shoulders of congregational volunteers, and it pools the assets in a fund that reflects UU values by engaging in socially responsible investing and shareholder advocacy. For example, none of the direct stock holdings are in companies that produce tobacco products or firearms. And the fund buys shares in some companies to try to change corporate behavior, by proposing and supporting resolutions at annual stockholder meetings. That strategy has been very successful in lobbying for workplace rights for transgender people. Recently the fund has been taking positions to try to persuade corporations to address climate change.

One percent of the fund is reserved for community investing, such as microfinance and community loans. The UUA matches congregations’ com­­munity investments up to $10,000.

At the beginning of 2013, the fund had $148 million in assets. “Because the money is pooled, we can achieve a degree of diversification that congregations cannot on their own,” said Tim Brennan, the UUA’s treasurer and CFO. During conference calls, participants learn how different parts of the UUCEF are performing. The large size of the fund also allows congregations with small endowments to invest in an array of strategies that would otherwise not be available to them and to pay lower fees because of the high balance. “There is also the day-to-day oversight of the portfolio small invest­ors wouldn’t get,” said Brennan, noting that the fund employs 15 different managers in a range of asset classes.

The fund is not appropriate for every congregation, Brennan notes. They need to be focused on long-term investing, rather than safeguarding cash reserves, he said. “The goal is to have a long-term return to allow a congregation to take regular distributions and not erode principal.”

Carol McMullen, chair of the UUA’s Investment Committee, ran a recent conference call for congregations. She provided a rundown of the fund’s return. And she responded to questions about how the fund screens out companies that do not meet its investment criteria. McMullen, a member of First Parish Church in Weston, Mass., is a volunteer on the committee, whose members are appointed by the UUA Board of Trustees. “The numbers are very strong this quarter,” she said, noting that year-to-date composite earnings as of Nov. 30, 2012, were up 11.1 percent. She also praised the UUA’s financial staff and the investment committee, and their work in helping congregations manage their investments. “They’re working hard to deliver professional oversight and fiduciary responsibility,” she said.

Department Close-up

Office of Financial Services

Mission: In addition to administering the UU Common Endowment Fund, the UUA Office of the Treasurer assists congregations with legacy giving, stewardship, benefits, tax issues, and other financial management services.

Size of Common Endowment Fund (as of January 1, 2013): $148 million

Congregational endowments in the Common Endowment Fund: 237

Congregational trusts in the fund: 125

This article appeared in the Spring 2013 issue of UU World (“Inside the UUA: Risk, Return, and Justice,” page 47). See sidebar for links to related resources.

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