San Francisco Opera Association
Restricted Endowment Fund Policy
I. Name The name of this fund is the San Francisco Opera Association Restricted Endowment Fund (the “Restricted Fund”). The Restricted Fund is an endowment fund as that term is defined in the Uniform Prudent Management of Institutional Funds Act, as enacted in California and as amended from time to time (“UPMIFA”). The San Francisco New Century Endowment Fund shall be referred to in this Policy as the “New Century Fund” and together with the Restricted Fund collectively as the “Opera Endowment.”
II. Management Assets of the Restricted Fund shall be owned and managed by the San Francisco Opera Association (the “Opera”) in accordance with the terms of this Policy. The goal of the Restricted Fund is to balance the current needs of the Opera and its constituencies with the obligation to preserve and grow the Restricted Fund for future generations. The Board of Directors of the Opera (the “Board”) has delegated the management of the assets of the Restricted Fund to the Investment Committee.
III. Purpose The purpose of the Restricted Fund is to further the charitable and educational purposes of the Opera by providing general support for its operating and program-related needs, as determined by the Board. A donor making a contribution to the Restricted Fund may restrict the use of the gift to specific uses subject to the terms of the Opera’s Gift Acceptance Policy as amended from time to time.
IV. Annual Spending The Opera may appropriate for expenditure once each fiscal year an amount from the Restricted Fund as the Board determines is prudent, and consistent with UPMIFA, any donor restrictions on assets held by the Restricted Fund, the intent that the Restricted Fund be an Endowment Fund, and the Coordination of Funds provision of this Policy (the “Annual Draw”).
V. Investment Guidelines Assets of the Restricted Fund shall be invested according to the standards set forth in UPMIFA and the Opera’s Investment Policy, as amended from time to time and approved by the Executive Committee. Assets of the Restricted Fund may be commingled for purposes of investment with other assets of the Opera.
VI. Costs The Opera’s costs to hold and invest the Restricted Fund (“Investment Charges”) shall be charged to the Restricted Fund, and shall not diminish the Annual Draw subject to the Coordination of Funds provision of this Policy. Investment Charges shall be reviewed and approved by the Board annually.
VII. Emergency Appropriation If the Board determines that funds are urgently needed due to extraordinary circumstances, the Opera may appropriate, collectively from the Restricted Fund and the New Century Fund, for expenditure (a “Special Appropriation”) an amount not to exceed twenty-five percent (25%) of the Opera’s annual average approved budget during the latest three (3) fiscal years and consistent with the Coordination of Funds Provision, as set forth in the Bylaws of the Opera; provided, however, that a Special Appropriation shall not be made from any funds in the Restricted Fund that are restricted to prohibit such Special Appropriation.
VIII. Coordination of Funds Any withdrawal made from the Restricted Fund, either Annual Draw, Special Appropriation, borrowing, or Investment Charge, must be taken pari passu from the Restricted Fund and the New Century Fund in proportion to the respective aggregate value of each such Fund as of the date of the withdrawal; provided, however, that such pari passu allocation shall be made only to the extent that such allocation is permitted by donor restrictions applicable to assets held in the Restricted Fund.
IX. Loans The Opera may borrow from the Restricted Fund subject to the Coordination of Funds provision of this Policy. The total amount borrowed at any one time from the Opera Endowment shall not exceed twenty percent (20%) of the Opera’s annual average budget during the latest three (3) fiscal years. Any loan repayment made to the Opera Endowment must be divided between the Restricted Fund and New Century Fund in proportion to the outstanding loan balance owed to each fund. The Opera shall contribute monthly to the Restricted Fund an amount equal to the average outstanding balance in the preceding month multiplied by the value of the one year London Interbank Offered Rate (LIBOR), as last published in the preceding month, plus two percent (2.00%), all divided by twelve (12).
The Carried Amount is the smallest average outstanding balance owed to the Opera Endowment in any month during a fiscal year. Concurrent with any Annual Draw, the Carried Amount shall be calculated for the preceding fiscal year. If the Carried Amount is not zero, a mandatory Special Appropriation equal to the Carried Amount shall immediately be taken, and this withdrawal will first be applied to pay back any outstanding loan balance with any remainder to be transferred to the general operating funds of the Opera.
X. Accounting Any Restricted Fund assets that are held for a Specific Restricted Purpose shall be accounted for separately to facilitate their management.
XI. Use as Collateral The Opera may encumber the assets of the Restricted Fund as collateral only with the prior approval of the Executive Committee.
XII. Amendment This Policy may be amended only by the Board.
Approved by the Board of the Association on the 8th day of November, 2012
President, San Francisco Opera Association