1. Introduction
   

   1. This Investment Policy Statement (IPS) is crafted to guide the financial stewardship of University Impact's Donor-Advised Funds (DAFs). The primary aim of this IPS is to establish a structured and disciplined approach to managing the DAF’s financial assets. 

   2. This approach is founded on principles of fiduciary responsibility, transparency, and alignment with the overarching goals of University Impact. The IPS will serve as a dynamic document, adaptable to changing market conditions and evolving needs of the DAF while upholding the core values of University Impact.

2. Objectives and Purpose
   

   1. Capital Preservation: The foremost objective is to safeguard the principal amount of the DAF. Investment strategies will be tailored to minimize the risk of significant losses, ensuring the fund’s capital remains intact over time.

   2. Income Generation: A key goal is to generate a consistent and reliable stream of income. This income will directly support the charitable activities and initiatives of University Impact and its DAFs. The focus will be on investments that offer stable returns, thereby providing a continuous financial resource for the DAF's philanthropic missions.

   3. Growth of Assets: In addition to preserving capital and generating income, the policy also seeks to grow the fund’s assets. This growth is essential for expanding the scale and scope of the DAF’s philanthropic impact. The investment strategy will include elements that offer potential for capital appreciation, balanced with the overall risk profile of the fund.

3. Risk Tolerance
   

   1. Time Horizon: The investment approach will be oriented towards the time horizon of each individual DAF. 

   2. Donor-Advisor Recommendations: The investment decisions may reflect the values of the donor-advisor. This may include maintaining a broader alignment with the donor-advisors' ethical and philanthropic values.

   3. Financial Stability and Grant-Making Obligations: The investment strategy will be attuned to the need for maintaining financial stability. This stability is crucial for ensuring the DAF can meet its grant-making commitments. Investments will be selected based on their ability to contribute to a stable financial base, enabling the DAF to fulfill its philanthropic obligations reliably.

4. Asset Allocation: 

Asset allocation is a critical component of the DAF’s investment strategy. The allocation strategy seeks to balance the growth potential of equities with the stability of fixed-income investments, the liquidity of cash equivalents, and the unique opportunities presented by alternative investments. This approach aims to optimize returns while managing risk.

1. Equities: The equity portion of the portfolio may include a mix of domestic and international stocks. The focus should be on investment- grade securities  with a track record of stable growth and strong management. Equity investments may be used as a source  of capital appreciation and long-term growth.

2. Fixed Income: Fixed income securities may form a significant part of the portfolio to provide stability and predictable income. This may include government bonds, corporate bonds, and municipal bonds. The focus may be on investment-grade securities that offer lower risk and reliable returns.

3. Cash and Cash Equivalents: A portion of the portfolio may be held in cash and cash equivalents. This allocation may ensure sufficient liquidity for operational needs, grant disbursements, and taking advantage of new investment opportunities. It includes instruments like treasury bills, money market funds, and short-term certificates of deposit.

4. Alternative Investments: The DAF may allocate a portion of its assets to alternative investments, including real estate, private equity, hedge funds, and commodities. These investments can offer higher returns and diversification benefits but also carry higher risks and liquidity constraints. The selection of alternative investments may be guided by rigorous due diligence and alignment with the overall investment objectives.

5. Alignment with Risk Tolerance: Alternative investments shall be selected based on their compatibility with the DAF's overall risk tolerance.

6. Investment Objectives: The selection of alternative investments will be driven by the DAF's broader investment objectives, including diversification, return potential, and correlation with other assets in the portfolio.

7. Due Diligence: Rigorous due diligence will be conducted for each alternative investment, assessing factors such as market trends, management quality, and potential risks and returns.

8. Proportion of Portfolio: The allocation to alternative investments will be carefully determined, ensuring it complements the overall investment portfolio.

9. Monitoring and Review: Alternative investments will be subject to ongoing monitoring and periodic review, evaluating their performance in the context of the DAF's investment strategy and market conditions.

10. Liquidity Considerations: Given the typically lower liquidity of alternative investments, the liquidity needs of the DAF will be carefully balanced when making these investment decisions.

V. No Guarantee of Return Below-Market-Rate Investments: 

The assets within a DAF are earmarked for charitable giving, a purpose that requires a distinct vision for investment strategy. The UI DAF seeks to support charitable causes not only through traditional investment vehicles, but also by making below-market-rate investments that generate positive social or environmental outcomes. These may include investments that are often referred to as Mission-Related or Program-Related Investments. 

1.  Objectives:

1. Generate measurable positive social or environmental impact alongside financial returns.

2. Support innovative projects, organizations, or initiatives that align with the Fund's mission and values.

3. Provide patient capital to enterprises addressing critical social or environmental challenges.

4. Mitigate risk by conducting thorough due diligence and monitoring the performance of below-market-rate investments.

5. Maintain liquidity to meet current and anticipated grant obligations.

2. Guidelines:

6. Nature of Impact Investments: Impact investments are intended to generate both a social or environmental impact and a financial return. This may include investments guided by environmental, social, and governance (ESG) factors.

7. Compliance with Tax Regulations: In making impact investments, the DAF will avoid any transactions that could be construed as taxable expenditures. While impact investments typically do not qualify as distributions in the traditional sense, the DAF will monitor IRS guidance to ensure compliance.

8. Prudent Investor Requirements: The DAF's impact investments will adhere to state prudent investor requirements as per the Uniform Prudent Management of Institutional Funds Act (UPMIFA). This includes a fiduciary standard for managing and investing funds, balancing the pursuit of mission-related objectives with the responsibility of financial prudence.

9. Donor-Advisor Intent and Flexibility: The DAF will consider donor-advisor intent in its impact investment decisions, allowing for a degree of flexibility in selecting higher-risk investments when aligned with the donor-advisor's wishes and the DAF’s mission.

VI. Diversification: 

Diversification is a cornerstone of the investment strategy for the DAF, aimed at reducing risk and enhancing returns over the long term.

2. Limiting Exposure: The portfolio will avoid over-concentration in any single asset, asset class, or individual security. This will help mitigate the impact of specific market or sector downturns.

3. Geographic and Sectoral Diversification: Investments may be spread across various geographic regions and economic sectors. This broad diversification may help cushion the portfolio against region-specific or sector-specific economic challenges.

4. Periodic Review and Adjustment: The asset allocation and diversification strategy will be reviewed regularly. This ensures the portfolio remains aligned with the DAF's investment objectives, risk tolerance, and market conditions. Adjustments will be made as needed to respond to changes in economic forecasts, market trends, and the performance of different asset classes.

5. Investment Selection Criteria: 

The criteria for selecting specific investments are integral to ensuring the DAF's portfolio aligns with its financial and ethical objectives. The following criteria will guide investment decisions:

1. Credit Ratings for Fixed-Income Securities: The DAF will prioritize fixed-income securities with strong credit ratings. These ratings, assigned by reputable agencies, indicate the creditworthiness of bond issuers and their ability to meet financial commitments. Preference will be given to investment-grade bonds that offer a favorable balance between risk and return.

2. Alignment with Social and Environmental Values (SRI and ESG Factors): Investments will be evaluated for their alignment with Socially Responsible Investing (SRI) and Environmental, Social, and Governance (ESG) criteria. This involves assessing potential investments for their impact on environmental sustainability, social responsibility, and governance practices. The DAF will favor investments that contribute positively to these areas, reflecting University Impact's commitment to ethical and responsible investing.

6. Investment Manager Selection: 

Selecting the right investment managers is crucial for achieving the DAF's investment objectives. The criteria for this selection include:

1. Demonstrated Expertise and Qualifications: Investment managers will be chosen based on their proven expertise in the relevant investment areas. This includes formal qualifications, depth of experience, and a clear understanding of the DAF's investment philosophy and objectives.

2. Performance History and Benchmarks: A track record of consistent performance relative to appropriate benchmarks will be a key consideration. This historical performance provides insight into the manager’s ability to achieve desired investment outcomes under varying market conditions.

3. Commitment to Diversity, Equity, and Inclusion (DEI) Principles: Investment managers must make a commitment to incorporating DEI principles. This includes fostering diverse teams, inclusive investment practices, and promoting equity within their organization and through their investment choices.

4. Transparent Reporting and Communication Practices: The DAF requires investment managers to adhere to high standards of transparency in reporting and communication. This includes regular, detailed reports on investment performance, strategies employed, and adherence to the DAF’s investment criteria. Effective communication is essential for ensuring alignment and building trust between the DAF and its investment managers.

7. Performance Monitoring: 

The ongoing monitoring of investment performance is a critical aspect of the DAF's overall investment strategy. This process ensures that the investment portfolio remains aligned with the established goals and risk parameters.

1. Regular Review Against Benchmarks: The performance of the investment portfolio will be regularly reviewed and compared against established benchmarks. These benchmarks will be chosen based on their relevance to each component of the portfolio, such as equity market indices for stock investments or bond market indices for fixed-income securities. The aim is to assess the effectiveness of the investment strategy and the performance of individual asset classes and managers.

2. Performance Analysis: This review will include an analysis of both absolute performance and relative performance against benchmarks. The analysis will take into account various factors such as market conditions, economic trends, and the impact of specific investment decisions.

3. Reporting and Documentation: The findings from the performance reviews will be thoroughly documented and reported to the Board and relevant committees. This reporting will provide transparency and accountability, ensuring all stakeholders are informed about the DAF’s investment performance.

8. Rebalancing and Review: Regular rebalancing and review of the investment portfolio are essential to maintain alignment with the Investment Policy Statement (IPS) objectives and to adapt to changing market conditions.

   1. Rebalancing Strategy: The portfolio will be rebalanced to its target asset allocation at regular intervals or when significant deviations occur. This process involves adjusting the levels of different asset classes to keep the portfolio in line with the desired risk and return profile. Rebalancing helps in capitalizing on market opportunities and mitigating risks.

   2. Review Process: The review process will include an assessment of the current economic environment, market trends, and any changes in the DAF’s financial objectives or risk tolerance. This process ensures that the investment strategy remains relevant and effective in achieving the DAF's goals.

   3. Adjustments and Modifications: Based on the review, adjustments may be made to the portfolio’s asset allocation, investment selection criteria, or the selection of investment managers. These modifications will be made to optimize the portfolio’s performance, manage risk, and ensure that the DAF’s investment activities are in line with its mission and values.

9. Liquidity and Cash Management: Effective liquidity and cash management are vital components of the DAF’s investment strategy, ensuring that funds are available when needed for its charitable activities and operational requirements.

   1. Meeting Grant Obligations: A primary consideration in managing liquidity is the DAF’s commitment to fulfilling its grant-making responsibilities. A portion of the portfolio will be allocated to liquid assets to ensure that funds are readily available for scheduled grants and other philanthropic activities. This allocation will be regularly reviewed and adjusted to align with the DAF’s grant-making calendar and commitments.

   2. Addressing Unforeseen Expenses: The DAF will also maintain a reserve to address unforeseen expenses or emergencies. This reserve is crucial for ensuring the DAF’s operational integrity and ability to respond to unexpected situations without disrupting its investment strategy or philanthropic efforts.

   3. Investment in Short-Term Instruments: To maintain liquidity, a portion of the DAF’s assets may be invested in short-term instruments like treasury bills, money market funds, or short-duration bond funds. These instruments provide a low-risk way to earn returns on cash reserves while ensuring funds are available as needed.

10. Legal and Regulatory Compliance: Adherence to legal and regulatory standards is fundamental to the governance of the DAF’s investment activities.

    1. Compliance with Laws and Regulations: The DAF’s investment activities will strictly adhere to all applicable federal, state, and local laws and regulations. This includes compliance with tax laws, securities regulations, and other statutory requirements relevant to the operation of a Donor-Advised Fund.

    2. Ethical Standards: Beyond legal compliance, the DAF is committed to maintaining the highest ethical standards in its investment practices. This commitment includes transparency, accountability, and the avoidance of conflicts of interest.

    3. Regular Review of Compliance Framework: The DAF will regularly review its compliance framework to ensure ongoing adherence to legal and regulatory changes. This review will be conducted with the assistance of legal and financial experts to ensure that the DAF’s investment activities remain compliant and ethically sound.

    4. Training and Awareness: Board members, staff, and investment managers involved with the DAF will receive regular training and updates on relevant legal and regulatory requirements. This ensures that all parties are aware of their responsibilities and the importance of compliance in their roles.

11. Reporting and Communication: Effective reporting and communication are essential components of the DAF's investment strategy, ensuring transparency, accountability, and informed decision-making. The DAF is committed to providing regular and comprehensive reports to the Board and stakeholders, encompassing various aspects of its investment activities.

    1. Investment Performance Updates: The DAF will provide detailed updates on the performance of its investment portfolio. These updates will include information on returns, comparison with relevant benchmarks, and analysis of performance drivers. The aim is to provide a clear and thorough understanding of how the investments are performing against the set objectives and market conditions.

    2. Manager Reports: Reports from investment managers will be a key part of the communication strategy. These reports will detail the investment strategies employed, the performance of managed funds, market insights, and any other relevant information about the management of the DAF’s assets. This will facilitate an understanding of the managers' approaches and their alignment with the DAF’s investment principles.

    3. Policy Changes or Significant Developments: The DAF will report any changes to the investment policy or other significant developments that could impact its investment strategy. This includes changes in asset allocation, risk tolerance, investment selection criteria, or regulatory adjustments. By keeping stakeholders informed of such changes, the DAF ensures a transparent and dynamic approach to investment management.

    4. Frequency and Format of Reporting: Reporting will be conducted regularly, such as quarterly or bi-annually, and will be presented in a clear, concise, and accessible format. The reports will be designed to be informative for both those with financial expertise and other stakeholders with less financial background.

    5. Stakeholder Engagement: The DAF will encourage active engagement from its stakeholders in response to these reports. Feedback and questions will be welcomed as part of an ongoing dialogue about the fund’s investment activities. This engagement is crucial for maintaining alignment with the interests and values of the DAF’s stakeholders.

    6. Accessibility of Information: Ensuring that information is accessible to all stakeholders is a priority. This may involve using multiple communication channels, such as digital platforms, meetings, and printed materials, to disseminate reports and updates effectively.

12. Electronic Consent: Electronic consent, using platforms like DocuSign, has simplified the process of making investment decisions for Donor-Advised Funds (DAFs). This method allows for quick and secure approval of transactions from any location, ensuring efficient fund management. It's also environmentally friendly and keeps detailed records for compliance purposes. As digital financial regulations evolve, these platforms adapt to ensure all investments are legally sound. Overall, electronic consent makes managing DAF investments more streamlined and secure.

Amendments: This investment policy may be amended from time to time by the Fund's governing body, subject to applicable legal and regulatory requirements. Any amendments should be made with careful consideration of the Fund's objectives, risk tolerance, and applicable investment guidelines.