Iva Hillegas Schatz, Director of Planned Giving interviews Ronald W. Cronk, Vice President of Administration and Finance, about Westmont’s Pooled Income Fund.
Ron, when did Westmont establish a Pooled Income Fund, and who manages it?
The college created this fund in 1979, and over the years, we have engaged several financial institutions to serve as its trustee. Last November, we assumed these responsibilities ourselves.
Why did Westmont decide to manage its own Pooled Income Fund?
Financial institutions typically charge fees for serving as a trustee. Although these fees don’t directly reduce the income each participant receives, they do reduce the principal amount invested. Westmont will not levy any fees for serving as the trustee.
Now that Westmont has become the trustee of the Pooled Income Fund, how do we manage and invest it?
The Finance Committee of Westmont’s Board of Trustees oversees the management of the Fund. Currently we use the same fixed-income, common investment fund for both our endowment and Pooled Income Fund. This diversified portfolio includes marketable securities of intermediate and longer-term maturities.
What kind of payout to donors does Westmont hope to achieve? Will this change now that the college is directly managing its own fund?
Our objective has always been—and will remain— maximizing the income earned for the benefit of the participants, consistent with the safety and preservation of the principal.
What was the rate of return in 1996?
The Fund earned and distributed slightly more than 6.6 percent on its beginning market value during 1996 with some loss in value over the year. This return resembled that of pooled income funds at other institutions.
Is the Westmont Pooled Income Fund similar to a mutual fund? Do donors receive payments monthly or quarterly?
Our Pooled Income Fund resembles a mutual fund in that it assigns participants units or shares based on the amount they contribute to it. We manage the combined assets in the Fund in common, and participants share pro rata in the earnings each quarter. Westmont provides quarterly reports and annual tax forms to each donor.
Some Westmont donors also set up gift annuities. How does the Pooled Income Fund differ from gift annuities?
With a gift annuity, the college makes an individual contract to pay a fixed annuity rate based upon age. Westmont guarantees the annuity payments, which continue throughout the life of the beneficiary, with all its assets as regulated by the California Insurance Commissioner. Pooled income fund payments vary based on the actual earnings of the fund. For example when interest rates rose in the late 1980s, our Fund earned and distributed nearly 10 percent. Because Westmont offers both plans, donors can decide which one best fits their needs.
A minimum gift of $1,000 provides income to the donor and a future gift to Westmont. For more information and an application for the Westmont Pooled Income Fund or the Westmont Gift Annuity, contact Iva Hillegas Schatz at 805/565-6034.