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Endowment Spending Policy

Lewiston Public Library Policy

Endowment Spending

The Endowment Fund of the Lewiston Public Library (LPL) is a pool of permanently endowed funds. The combining of individual funds for investment purposes creates greater flexibility in managing portfolios, enabling the LPL to develop a diversified investment approach to control risk and protect the assets of the Fund. The endowments are accounted for separately, sharing in the investment earnings and current value of the Endowment Fund based on their respective percentages of the Fund’s value. Although the endowments are accounted for separately, gifts of securities entering the investment pool become part of the pool and no longer are associated with the endowment. Thus, gains and losses resulting from a gift of securities affect the investment pool as a whole, not the endowment from which the gift originated.

The objective in managing the Lewiston Public Library Endowment Fund is to balance the long-term needs of the endowment with the short-term needs of the Library. Thus, we aim to protect the purchasing power of the Endowment by providing a rate of growth to keep pace with inflation as a minimum (long-term need), and pay out an adequate amount of income to support the purposes of the Endowment (short-term need). The endowment’s investment committee has an expected return for the Endowment of 6%. This 6% self-imposed benchmark, is what is projected feasible, given the investment restrictions the City of Lewiston faces as a municipality. To facilitate the achievement of these goals, the City of Lewiston will operate the Endowment using the total return basis.

The total return basis focuses on the overall return of the investment portfolio, including both investment income and net appreciation. Under the total return basis, an Endowment spending rate of the invested assets is established, versus spending only from interest and dividend income. The Endowment Fund’s spending rate, as established by its Board of Trustees, is 4% of the average fair market value of the investment pool as of the past three years ended June 30.

The Library Director shall develop an Endowment Expenditure Budget and shall annually present it to the Library Board for adoption. All expenditures from the Endowment Fund must be made in accordance with the adopted Endowment Expenditure Budget unless otherwise specifically authorized by the Library Board.

Adopted 12/9/98
Revised 9/10/2003
Revised 9/9/2010

Page last updated: Aug 22, 2013

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