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FFOGHorn News: September 2017

 

 In this September 2017 Issue, No. 220

FFOG 2017 FALL MEETING: REGISTER NOW!

 

Register now for the FFOG Fall Meeting in Boston, Massachusetts, scheduled for October 17-20, 2017.
The meeting will be held at the Omni Parker House Hotel, a Boston landmark. FFOG has secured a rate of $329 per night plus tax for single/double occupancy.

Please click here to book your room for the FFOG 2017 Fall meeting. Additionally, guests can call 1-800-THE-OMNI and mention the FFOG 2017 Fall Meeting to book your room. The group rate will be offered until 5:00 PM EDT September 25, 2017 and is based upon availability. After September 25, 2017 rooms may be available at the hotel's prevailing rate.

The group block historically sells out, so make your reservations early! If you have difficulty booking a specific night, please be sure to reserve what you can and contact FFOG's Meeting Manager, Wendy Stevens, for assistance at wstevens@talley.com or 856-423-3156.

"Updating the Endowment Model" is the theme of this fall meeting. Sessions will begin on Wednesday with David Salem of Windhorse Capital Management, presenting a lunch session titled, Into Thin Air: Strategies for Prospering Under Perilous Market Conditions. Wednesday afternoon will continue with a presentation by Dr. Rory Knight of Oxford Metrica and a presentation by Dan diBartolomeo of Northfield Information Services, titled Factor-Based Asset Allocation and Illiquid Investments. The day will conclude with a panel session on Attribution Analyses followed by a dinner reception to be held at the Omni Parker House Hotel.

Breakfast discussions will kick off the morning on Thursday, with a session from Man Numeric’s CEO, Shanta Puchtler titled How is the growth of Quant changing investment management? to follow immediately after. The day will continue with sessions from Tom Brakke, CFA at tjb research, speaking on Manager Selection, and Diane Mulcahy, Author, Speaker, Adjunct Lecturer, and Senior Fellow at Kauffman Foundation. The Wednesday afternoon lunch session, titled Artificial Intelligence and How It’s Affecting the Investment and Financial Industries, will be presented by the Director, Database, Analytics, & AI Outbound & Customer Programs of Amazon Web Serivices, Dan Neault. FFOG’s APC and IPC will then hold a joint session, The Role of the CFO When There is No Internal CIO, which will be moderated by Jeffry Haber. A FASB update and the presentation of the FFOG Compensation Survey will round out Thursday afternoon, to end at the offsite event.

On Friday morning, breakfast discussions will begin the day again, with the results of the FFOG Administrative Costs Survey to follow. The afternoon will conclude with a session titled Cyber Security and a FFOG panel session on Managing Payouts.

What are you waiting for? Join your FFOG colleagues and friends and register for the meeting now!

   

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ADMINISTRATIVE COSTS SURVEY

The Administrative Costs Survey will close at midnight on September 5, 2017. For those foundations who have participated for the past 14 years, the survey team would like to thank you for successfully submitting your 15th year of data.

Thank you to all foundations who have completed the survey this year. We look forward to your continued participation.

Debbi Gillespie & Jeffry Haber
Administrative Costs Survey Chairs

 

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GENUINLEY INTERESTING INVESTMENT READING
by Amy Hill

For September’s investment reading, we are honored to have a contribution from one of our own, Larry Siegel. In the attached article, “Index Fund Silliness: Indexing Doesn’t Distort Anything”, Larry debunks (with proof) the widely held view that increasingly popular indexing has helped to inflate prices of certain stocks.

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MEMBERS IN THE NEWS: AMY ROBINSON

 

FFOG's Amy Robinson, Vice President, CFO, and CAO of The Kresge Foundation, was recently profiled as a 2017 Powered by Women award recipient. Amy was selected as one of eight women nominated by DBusiness readers.

Read about her accomplishment by clicking here. 







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FFOG ONE-DAY SURVEY RESULTS: PRELIMINARY SALARY INCREASES FOR 2018

Here are the results of this month’s survey about what foundations are projecting to give as the percentage increase for base salaries in their organizations for 2018. Ninety-six foundations participated in this month’s survey.

FFOG foundations use many different sources in determining their annual salary adjustments. For the seventh consecutive year, the median adjustment is 3%. Although choosing 3% is not listed as a source, it seems like the de facto starting point for adjustments. A histogram of the sources used:

 

The survey asked foundations whether the pool was the same across all staffing levels, or different between senior management, middle management, and other staff. Only eight foundations responded that their pool percentages varied across positions. Since the sample size was too small to break down by asset size or region, the data details have been aggregated with the eighty-three foundations using a single, salary pool factor. For all ninety-six foundations participating in the survey, the average increase for senior management was 3.06%, for middle management, 3.05%, and for other staff, 3.05%. The detailed analysis broken down by asset size and region is given below:
 


 

 

 

 

Some additional points of reference on 2018 projected salary increases:

  • WorldatWork survey from July 2017 projects an average increase of 3.1%, up from 3.0% in 2017.
  • Willis Towers Watson survey August 2017 projects a 3.0% increase overall with a 3.1% for exec level.  
  • Mercer projects a 2.9% increase for 2018, up from 2.8% in 2017.
  • ERI Economic Research Institute – 3.2%.
  • SHRM report of 5/31/17 projects 2018 salary increases of 3.2% for 2018 (2017: 3.1%, 2016: 3.0%). This in the context of projected 2018 GDP increase of 2.5% (2017: 2.3%, 2016: 1.6%), a decline in inflation to 2.4% in 2018 (2017: 2.7%, 2016: 1.6%), and unemployment reduced to 4.6% (2017: 4.7%, 2016: 4.9%).

Some downward pressure on wage growth is inconsistent with strong labor demand:

  • "On the face of it, it doesn't make sense: Strong demand for labor, yet stagnant wage growth. The deeper reason is a labor market that, in most sectors, is not as tight as unemployment numbers make it seem..." Scott Kingdom, Korn Ferry Institute (SHRM, Stephen Miller 7/20/17)
  • "Some economists also point to rising costs of benefits such as healthcare as a brake on take home pay...[Companies] offset the costs by raising wages more slowly." Jeffry Bartash, MarketWatch

More variations in compensation and increases are expected:

  • "US employers expect to hold the line on pay raises in 2018...employers [also] continue to reward their best performers with significantly higher raises to retain..." Per Willis Towers Watson report, 8/24/17
  • “Companies are relying more on variable pay, such as annual incentives and discretionary bonuses, to recognize and reward their best performers", Laura Sejen, WTW
  • "Employers are rethinking how to administer limited salary budgets. Some are moving away from differentiating increases based on an employee's previous year's performance altogether while others are focusing on rewarding employees for skill development. So [while] forecasting 3% increases, the landscape of how and when they are giving increases varies considerably." - Sandra McLellan, WTW

For the full survey results, please click here.

Additional resources about compensation sources of input and philosophy can be found in the FFOG Compensation Survey. Log into the FFOGBank: Compensation Database, click on the Resources tab, and click on the report titled "Compensation Philosophy Summary".



 


Thanks to those that participated in the survey this month.

Please contact Bob Bailey (bob@haasjr.org), Saul Bakst (s.bakst@fordfoundation.org), or Tim Otto (tim.otto@vlgf.nl) for feedback and/or suggestions for future survey topics.
   



                    

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FFOG WEBINAR: COMPENSATION SURVEY TRAINING

A webinar on how to use and navigate the results of the Compensation Survey will be offered to ALL FFOG foundation staff members on September 7, 2017 at 1:00 PM EDT. This session will provide you with an introduction to FFOG's Compensation Survey benchmarking tool. We will guide you through the basics of logging in to the Compensation Survey Database, creating comparison groups, and accessing reports.


Click here to register now.


Do you have an idea for a webinar? If so, please send an email to info@ffog.org.

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NEW AT THE FFOG WEBSITE

Collaborate: Hot Topics


Cyber Security & the Audit Committee: Paula Herring of Meadows Foundation requested information from members regarding discussion of cyber security within foundation audit committees. Ten responses were received throughout the month with answers to Paula’s specific questions. The majority of responses detailed audit committees’ inquiries and requested reporting; two of the respondents discussed cyber security reviews at the full board level. Paula and the Administrative Program Committee will incorporate the feedback into a cyber security breakfast roundatble at the FFOG Fall Meeting in Boston.

China Operations/New Chinese NGO-Law: Dr. Hans-Werner Cieslik of Robert Bosch Stiftung inquired regarding other foundations’ experience with the legal process to register projects or set up NGO-offices in China. Gerry Watson of Rockefeller Brothers Fund offered the resources of the Fund’s program and corporate secretary teams; she also invited those interested in joining a further discussion on the topic to email her at gwatson@rbf.org. John Bernstein of Ford Foundation recommended a local counsel and provided contact information.

Job Center

Investment Officer
Meyer Memorial Trust
Portland, OR

Executive Vice President and CFO
Kamehameha Schools
Hawaii

Investment Risk & Operations Associate
The Kresge Foundation
Troy, MI

Manager, Enterprise Risk Management
Margaret A. Cargill Philanthropies
Eden Prairie, MN

Director, Finance and Administration
William Penn Foundation
Philadelphia, PA

Senior Accountant
The Abell Foundation
Baltimore, MD

Controller
Barr Foundation
Boston, MA


New FFOG Members

Regular Members

Robert Allan Smith, bsmith@wffmail.com
Director of Accounting and Operations
Walton Family Foundation

Lee Lucca,
llucca@sobrato.org
Director of Finance
Sobrato Family Foundation

Affiliate Members

Jillian Green, jgreen@arnoldfoundation.org
Accounting & Human Resources Manager
Laura and John Arnold Foundation

Melissa Haas, melissa.haas@gatesfoundation.org 
Technical Accountant
Bill & Melinda Gates Foundation

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QUOTE OF THE MONTH

 
                       
“When the facts change, I change my mind….”

John Maynard Keynes








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