Finance Committee report
By John Keevert
Thanks to a couple of bequests in the last decade, Metro Justice has avoided cash flow problems. The bequests didn’t specify a particular use, and we weren’t sure of the best use for the funds, so until we decided, we held the money in relatively safe certificates of deposit at Community Development Financial Institutions like the Genesee Co-op Credit Union. It now appears that we aren’t likely to be buying a building or some other major capital project, so we would like to get a better return on the money than the very low interest that CDs currently earn to help fund our ongoing activities.
The Finance Committee has explored a diverse variety of socially responsible, no-load mutual funds that have had a good long-term track records. What we proposed, and the Metro Justice Education Fund Council accepted, was to keep about half the bequest money (50%) in CDs, and invest the rest as follows:
Parnassus Equity Income Fund (large-cap) Symbol PRBLX:20%
Ariel Appreciation stock (mid-cap) CAAPX:10%
Pax MSCI International ESG Index Fund (International large-cap) PXINX:5%
Parnassus Small Cap Fund (small-cap) PARSX:5%
Parnassus Fixed Income Fund (intermediate term bonds)PRFIX: 10%
The switchover to mutual funds will occur gradually over the next six months as money becomes available when CDs mature. We consider this a fairly “conservative” financial move, since if the stock market falters for a while, we would still have substantial resources in CDs to tap without having to sell deflated stocks. Looking at “average” earnings in each category, we might expect to be seeing a 4.7% annual return on the total bequest money, much better than the barely 0.5% we see now (but short term results could be quite different, even negative).
The committee wants to particularly thank member Ken Traub for his insights and especially his efforts to assemble financial data, and explain it to us.