The Health Foundation of Central Mass

76 Investments W hile e Health Foundation maintained the 501(c)(4) tax status of its predecessor foundation and is not a private foundation that is required to make a minimum 5% distribution every year, it was agreed upon at its founding that e Health Foundation would make reasonable efforts to distrib- ute 5% of its assets annually. e long-term investment objective for e Health Foundation is to earn, over time, a real (inflation-adjusted) annual rate of return that exceeds the foundation's spending rate and additional expenses, including investment consulting fees and operating expenses. e Investment Com- mittee is responsible for recommending to the Board of Directors the investment objectives, allocation strategies, policy guidelines, and the hiring and termination of investment consultants and investment managers related to the investment of e Health Foundation's assets to ensure that long-term objective is met. e Health Foundation has adopted an absolute return orientation. As a result, the Investment Committee pursues in- vestments and investment managers that typically capture most, but not all, of the upside when markets produce positive re- turns, in exchange for increased downside protection when markets produce negative returns. e absolute return orientation is expected to moderate fluctuations and provide a more stable return from year- to-year, thereby facilitating funding of e Health Foundation's commitments to large, multi-year grant projects through the Synergy Initiative. e Health Foundation has benefit- ed from the services of an independent investment consultant to assist the Invest- ment Committee in developing and then attaining the investment objectives. e Health Foundation initially engaged Prime, Buchholz & Associates before transition- ing to Chicago-based Ellwood & Associ- ates in 2004. Since that time, e Health Foundation's primary consultant team has remained in place even aer the firm was acquired by national investment CAPTRUST Financial Advisors in 2021. Over the years, the seasoned Ellwood/ CAPTRUST consultant team has advised e Health Foundation on important de- cisions. For example, in 2005, e Health Foundation added the socially responsible investing restriction of tobacco-related companies such that investment manag- ers would be instructed to make every reasonable effort not to invest in compa- nies which have significant involvement with tobacco. In 2007, e Health Foun- dation sold its 300 Grove Street property, which was a vestige of the original Central Massachusetts Health Care health plan, and which was the site of the Worcester Surgical Center for many years. On an on- going basis, e Health Foundation's asset allocation policy, investment managers, and environmental, social, and governance criteria are evaluated with the support and expertise of the consultant team. n Program-Related Investment A program-related investment (PRI) is a type of mission or social investment that foundations make in order to achieve their philanthropic goals. PRIs are vehicles for making inexpensive capital available to organizations addressing social or environmental concerns. In 2007, The Health Foundation's Board of Directors approved its first PRI – a loan to Worcester Community Housing Resources (WCHR) for the Home Again Housing Loan Fund. The loan was made to complement prior Synergy Initiative grants (totaling $2.2 million from 2007-2013) for the Home Again project to end adult chronic homelessness in Worcester. In April 2008, The Health Foundation made a PRI loan of $492,000 to WCHR. This 20-year loan accrues interest at 3% per year, with WCHR, as intermediary, retaining 1.5% for its services. This funding enabled WCHR to lend to Community Healthlink's real estate affiliate for the purchase of Spencer House (14-bed congregate unit) to provide affordable housing to formerly homeless individuals. "Over the years, the Investment Committee has worked hard to embrace the evolution of the capital markets and has been receptive to our recommendations of investment strategies utilized by their larger peers. This has resulted in The Health Foundation's portfolio being able to "punch above its weight," earning competitive returns that have met its long-term return objectives and ranking very highly in a universe of similar sized and larger peers." - Dan George, Partner, CAPTRUST The Health Foundation of Central Massachusetts intends to exist in perpetuity, as there will always be complex health issues for which philanthropic investments can be deployed to help address. As such, its assets have to be structured with a long-term time horizon and be managed consistent with the responsibilities of a fiduciary or of a steward of this public trust.

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