May 2012 Hope Board Meeting

Hope Christian Community Foundation www.hopeccf.org

Hope Christian Community Foundation exists

to serve Mid-South donors and ministries to

facilitate the building of God’s kingdom in

our community and throughout the world.

Our mission is to encourage philanthropy

and increase giving.

1Wednesday, May 23, 12

BOARD OF DIRECTORS MEETINGMAY 24, 2012

Financial Highlights for Fiscal 2012(12 months ended April 30, 2012)

Approval of Budget for Fiscal 2013

Charitable Gift Annuities

Other Matters

Hope Christian Community Foundation www.hopeccf.org2Wednesday, May 23, 12


FINANCIAL HIGHLIGHTS


$0

$20

$40

$60

$80

Millions

3.3

12.46.5

22.3

31.7

49.7

70.7 71.0

52.9

67.4

107.2 107.4

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Total Assets

Assets at April 30,2012 Were $107M,the Same as the Prior Year


$0

$50

$100

$150

$200

Millions

8 1529

3847

5773

92

125

156

191213

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Cumulative Grants Thru 04/30/12

Grants Made for the Fiscal 2012 Were $21M Bringing the Total Since Founding to $213M+



Change in Assets for 12 mos. ended 4/30 fy2011 fy2012Assets at Beginning of Fiscal Year $67.4 $107.2New DAFs Opened 32.1 1.6Contributions to DAFs 23.8 24.6Grants from DAFs (29.2) (21.2)Agency fund deposits .9 2.0Agency fund withdrawals (1.5) (.8)Net Investment Earnings 14.1 (6.1)Expenses + other-net (.4) .1Assets at April 30 (in millions) $107.2 $107.4 (DAF = Donor Advised Fund)

$ Millions


CHANGE OF ASSETS DURING FISCAL 2012

Thru 04.30.12Assets were unchanged for the yearStock market & other investments negatively impacted assets by $6.1M offset by net cash inflows from gifts received vs. grants paid of $3.4M, new funds opened of $1.6M and net agency fund deposits of $1.2MGifts received total $26.2M, down 0.01% from last yearGrants made were $21.2M, down 27% from last year(due to one large donor which is a business)


Hope Asset Allocation at April 30, 2012


8%10%

46%

37% CASHFixed IncomeEquitiesAlternatives



INCOME STATEMENTFISCAL YEAR ENDED APRIL 30, 2012



12 months ended April 30 (000)

fy 2012 Actual

fy 2012 Budget

fy 2011 Actual

Administrative Fee Income $544 $555 $512

Interest Income 134 132 131

Total Operating Revenue $678 $687 $642

Operating Expenses 507 493 474

Operating Income $172 $194 $168

Contributions 5 0 2

Net Income $176 $194 $170

$ Thousands


HIGHLIGHTS OF YTD FISCAL 2012

Income lower than budget due to lower average assets less than estimated

Expenses higher than budget due to cost of IRS audit and compensation expense

Fee income higher than last year due to higher average assets

Expenses higher than last year by $32k due to higher total compensation ($18k or 4.6%), IRS audit($3k), website costs ($4k) and expense of new brochure($9k)

Net income for the year of $176,00 compares with budget of $194,000 and $170,000 last year


CASH POSITION

Cash total is $672,000

Operating cash equals $545,000

Hope for Memphis fund cash equals $93,000 total, with obligations of $91,000 for a surplus of $2,000

Including surplus operating cash, Hope for Memphis Fund would be $47,000

Generous Community Initiative fund equals $34,000


FINANCIAL OUTLOOK

Hope’s revenue & bottom line is driven by fees on assets and interest rates

Stock market has been very volatile over the last 12 months decreasing 20% for the first 5 months and then increasing by 27% the last 7 months; assets at $107M compare to $92M last September. Volatility seems to have returned recently.

Short term interest rates appear to remain at low levels for the foreseeable future

At current asset levels, monthly income should be in the $15- $20K range



PROPOSED BUDGET FOR FISCAL 2013ENDING APRIL 30, 2013


BUDGET ASSUMPTIONS

25 new funds opened

Average assets of about $110 million

Slight decline in interest income as low rates continue

3% salary increases at 01/01/2013

3% increase in health insurance costs

7% decrease in fixed expenses and discretionary expenses: elimination of expenses for new brochure and IRS audit incurred in previous year



Twelve months ended April 30 (000) 2013 Budget 2012 Actual Change

Administrative Fee Income $559 $544 +2.8% due to higher average assets

Interest Income 126 134 low interest rates continue

Total Operating Revenue $685 $678

Total Operating Expenses 507 507

unchanged due to higher compensation & health

insurance by 3% offset by lower audit and brochure

costsOperating Income $178 $172 +3.5%Contributions 0 5Net Income $178 $176



CHARITABLE GIFT ANNUITIES


CHARITABLE GIFT ANNUITIES (CGA)

CGA has two components: an fixed annuity payment for the lifetime of the annuitant & a charitable gift.

For a conventional CGA, the charitable gift is designed to be approximately 50% of the cost of the annuity remaining when the annuitant (person receiving annuity) dies

Example: A $100,000 CGA for a 70 year old paying 5.1% is designed too have about $50,000 remaining when that person dies 16 years later (according to mortality table)

Issuer of conventional annuity thus assumes two risks: longevity risk and investment risk


HOPE CGA PROGRAM

We propose to issue CGAs and then re-insure them by purchasing a commercial annuity

In the previous example, the cost of a commercial annuity would cost approximately $70,000 leaving a balance of $30,000 immediately available for a charitable gift

We would initially get competitive bids for re-insurance from 3 highly rated companies: Mutual of New York, MetLife or Mutual of Omaha

The charitable gift could go to the donor’s donor advised fund or the church or charity of his choosing

We would receive 5-10% of the charitable gift as a contribution to the Hope for Memphis Fund


HOPE CGA PROGRAMAdvantages:

1. Eliminate longevity risk

2. Eliminate investment risk

3. Immediate gift rather than waiting until death

4. Substantially reduce back office costs since insurance company would mail checks and be responsible for tax reporting

Disadvantages:

1. Some people will die earlier than expected

2. The liability for paying the annuity remains a Hope liability in the event the insurer goes out of business


HOPE CGA PROGRAM POLICIES

Minimum Age: 65

Minimum annuity amount: $25,000

Reinsurance: All will be reinsured; however, to maximize donor’s charitable deduction, we will tell donor that we may reinsure

Annuity rates offered shall be those set by the AGCA (American Council on Gift Annuities)


HOPE CGA PROGRAM STATUS

We have applied to the state of TN to issue annuities; assuming no problems with our application, we expect approval in 2-3 weeks

We will spend approximately $1,300 to get in the business including state application cost and necessary software

In a related move, we will spend approximately $1300 to add a Planned Giving Section to our website designed by Sharpe and Company

We are asking for board approval to move forward with this plan


OTHER MATTERS


NEXT SCHEDULED BOARD OF DIRECTORS MEETING

September 27, 2012

January 24,2013


May 2012 Hope Board Meeting

Business

net income

months assets

operating income

income lower

change of assets

monthly income

impacted assets

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