The financial information presented here is taken from the audited Financial Statements for the years ended December 31, 2008 and 2007. The Ann Arbor Area Community Foundation's auditor, Plante & Moran, PLLC (formerly BKR Dupuis & Ryden), has issued an unqualified opinion on those statements.

With the dramatic drop in the stock market in the second half of 2008, the Community Foundation witnessed a 30.8% drop in the value of our funds. Given that dramatic decrease, two members of AAACF’s Investment Committee and respected financial advisors, Norman Herbert and David Sarns, share a valuable perspective key to understanding AAACF’s sound investment and spending policies.

Total Assets December 31, 2008 $39,737,990 Total Assets December 31, 2007 $53,232,188 29%  Unrestricted 21%  Field of Interest   5%  Scholarship 22%  Donor Advised 15%  Designated   1%  Charitable Remainder Trust   7%  Administrative

Revenues, Gains, and Support Gifts and Pledges $4,173,234 Investment Income $525,970 Net Appreciation on Investments Realized and Unrealized -$14,078,114 Change in Value of Liability to Life Beneficiary $164,746 Administrative Support and Other Income $131,621 Total Revenues, Gains, and Support -$9,412,035 Expenditures Grants and Scholarships $2,257,359 Investment Fees $93,665 Administrative Expenses $931,743 Total Expenditures $3,282,767 Change in Fund Balances -$12,694,802

 

Norman Herbert, AAACF’s Investment Committee and retired University of Michigan Vice President and Treasurer understands the value of the Community Foundation’s long-term philosophy and investment approach:

With the dramatic drop in the stock market in the second half of 2008, the Community Foundation witnessed a 30.8% drop in the value of our funds. As the second largest bear market in modern history, there were few places to hide from the downward spiral in investment values; all endowments and foundations experienced significant losses.

The Community Foundation is ever mindful of the “perpetual investment horizon”. As we go to print, our Investment Committee is revisiting and affirming the Community Foundation’s long-term asset allocation policy. Our historical experience with bear markets suggest that the Community Foundation’s fiscal and financial discipline – one that promotes a long-term view - continues to be the soundest strategic approach. We believe it’s important to stay the course. We don’t believe that a time of stress, short-term uncertainty, and extreme market volatility should be met with any dramatic policy changes. Since our founding in 1963, the Community Foundation has experienced seven other bear markets. That history suggests that even with a 33% decline over 16 months, the value of the Community Foundation’s portfolio did recover within a year of hitting a “trough” - increasing, on average, some 36%.

We are confident that we will grow out of the current fiscal crisis knowing that healthier times will indeed return, and we continue to believe in the Community Foundation’s notion of “For good. For ever.”


David Sarns, AAACF Investment Committee and 360 Advisors LLC, points to AAACF’s prudent spending policy and recent administrative restructuring:

The Community Foundation’s spending policy, which makes available 5% of a 16- month rolling average of AAACF’s total asset value to pay out, will certainly help protect AAACF’s short-term grantmaking capacity. Mindful of the impact that the current market conditions have had on our endowed assets, our Finance Committee worked with Staff to evaluate the Community Foundation’s 2009 operational budget to look for opportunities to cut discretionary spending and realign staff. Those efforts led to a 12% cut in AAACF’s administrative budget for 2009, while maintaining an effective and efficient organization. With those savings and a sound spending policy, the Community Foundation will actually be able to increase our general grant support by 8.5% in 2009 – despite the continued uncertainty in the financial markets. We are committed to managing our entrusted resources in a diligent and prudent manner – to allow the Community Foundation to continue to address the current and future needs of our community, For good. For ever
 

Accountability

We invite you to contact us to obtain any further information that might be useful to you. The Ann Arbor Area Community Foundation is fully accountable to the donors and citizens of this community. Our records, with the exception of specific donor gift information, are public and we are pleased to provide you with more detailed information regarding our operations. An independent audit is completed each year, currently by Plante & Moran, PLLC (formerly BKR Dupuis & Ryden), and the operations of AAACF are governed by a volunteer Board of Trustees composed of community members. In addition, the Ann Arbor Area Community Foundation willingly and successfully meets the Council on Foundations and Council of Michigan Foundations measures of Standards for Community Foundations.

Please contact AAACF at (734) 663-0401 if you would like a copy of the audited Financial Statements, the IRS 990 or any of the Foundation financial policies.