Community Foundation of the Lowcountry, Inc

COMMUNITY FOUNDATION OF THE LOWCOUNTRY, INC.

Policy for Use of Outside Advisors

The Community Foundation of the Lowcountry recognizes that there may be situations where a donor, either individual or agency, may wish to recommend an investment advisor other than the advisor employed by the Foundation to manage its pooled assets. Further, the Community Foundation recognizes that collaboration with professional investment advisors, especially those in the immediate area, can enhance philanthropic giving in the community it serves.

For these reasons, the Community Foundation allows donors to recommend an investment advisor other than the Community Foundation’s primary advisor so long as that advisor meets the criteria, conditions and requirements that follow. This includes an initial recommendation, as well as subsequent recommendations, should the initial advisor fail to perform adequately.

The Community Foundation maintains complete authority to approve, direct, monitor, and replace any investment advisor to Community Foundation funds.

Fund Criteria

The recommendation of an outside advisor shall not be an option for funds of less than $100,000.

Recommended Advisor shall not be an option for funds other than endowment funds or funds that will maintain a minimum balance of at least $100,000 for a period of no less than five years from the date established.

Approval Process

The Finance and Investment Committee of the Community Foundation shall be responsible for the evaluation and approval of any investment advisor recommended by a donor. The criteria for approval shall include, but not be limited to, the following:

- The advisor must be registered under the Investment Advisors Act of 1940 (exception for national broker/dealers),

- The advisor or its principals must have been engaged in the investment management profession on a full-time basis for at least ten (10) years,

- The advisor must manage at least $50 million in assets,

- The advisor’s filing document with Security and Exchange Commission, its ADV, Part II, must show no violations of Federal or state securities laws by either the firm or its employees. (In the

Policy Approved 05.18.2012 Amended for use by F&I on 10.25.2012, and by Board of Trustees on 11.16.2012 Page 1 case of national broker/dealers, the criterion applies to the individual broker(s) who have been designated by the donor),

- The advisor may not have any “related parties” issues with the donor, that is, no relationship to the donor nor donor’s family and no circumstance that would result in financial benefit or other private inurement to the donor or any member of the donor’s family,

- The advisor must provide references from at least three existing clients whose portfolios and objectives are similar to the Community Foundation’s, and

- The advisor must be able to present composite performance data for similar tax-exempt or tax- deferred portfolios for at least the previous five years.

The Community Foundation’s Finance and Investment Committee and/or the Community Foundation’s primary investment advisor shall review each recommended manager to assure that there are no indications that the advisor would be unsuitable for approval by the Committee.

Once the Community Foundation’s Finance and Investment Committee or primary advisor has established that the proposed advisor qualifies for further consideration, the Finance and Investment Committee shall review and vote on the approval of the proposed advisor.

Donor Requirements

Donors recommending an investment advisor other than the Community Foundation’s principal advisor must:

-sign a written request for the Community Foundation to employ their recommended advisor, even if the Community Foundation already utilizes that advisor for other portfolios,

-acknowledge the authority of the Community Foundation regarding 1) all investment issues and 2) the decision to retain or dismiss the advisor based on that advisor’s performance, failure to adhere to other Community Foundation guidelines, or any other reason the Community Foundation deems relevant to its responsibility to ensure the prudent management of its assets.

Responsibilities of Designated Advisors

Each advisor shall sign and operate under the terms and conditions of an agreement between the Community Foundation and the advisor.

Each advisor shall operate under the Community Foundation’s statement of investment policy and guidelines specific to the portfolio in question.

Each advisor shall provide monthly appraisals (either directly or through its custodian) for each portfolio managed, or for the pool of assets managed. Quarterly, the advisor shall provide the Community Foundation and its primary investment manager performance detail for all assets managed, including time-weighted performance for all portfolios and each major asset class therein, as well as for the Policy Approved 05.18.2012 Amended for use by F&I on 10.25.2012, and by Board of Trustees on 11.16.2012 Page 2 benchmarks stipulated in the policy and guidelines statement. Performance shall be reported net of expenses. Each advisor shall be available to meet with the Finance and Investment Committee quarterly, if so requested, to review performance and all other matters relevant to its inclusion as an approved advisor.

The fees charged by each recommended advisor must be approved by the Finance and Investment Committee. At least annually, the advisor shall be requested to provide an estimate of the total annualized management expense (in percentage of assets managed) as of the date of the estimate, including all fees to sub-advisors and the underlying expenses of mutual funds and exchange-traded funds that the advisor may utilize. Fees are expected to be competitive with those charged by similar advisors for similar asset amounts.

Grounds for Removal

The Finance and Investment Committee shall be responsible, with the assistance and advice of its primary investment manager, for reviewing at least annually, the performance and costs of each advisor as well as any other pertinent issues. The grounds upon which the removal of an advisor would be undertaken would include failure to perform in line with performance objectives and relevant benchmarks over a market cycle (or at least three years), material failure to adhere to investment guidelines, breach of security and/or related laws, or charging of fees that the Committee deems unreasonable based on its experience with other similar advisors.

Policy Approved 05.18.2012 Amended for use by F&I on 10.25.2012, and by Board of Trustees on 11.16.2012 Page 3