At the Annual Meeting to be held on Sunday, May 20th, amendments to the Capital Trust will be presented. This page is to give background on the Capital Trust Amendments.
Explanation of Proposed Capital Trust Agreement Amendments and Reason for Amendments
1. Direct that Trust asset earnings be reinvested instead of annually distributed, and authorize the Board to annually withdraw no more than 4% of the value of the Capital Trust investments but only if needed to pay for budgeted expenses. (Section 3.) Reimbursement of earnings simplifies investing in general and permits a focus on prudent investment growth while eliminating the pressure to primarily focus on income. It has also become common with foundations (such as the Trust) to permit minor withdrawals of capital if needed for approved budgetary purposes; based on historic data, investment returns generally exceed 4% so this would not deplete the principal if ever needed.
2. Authorize the Capital Trust to accept Church general moneys (including moneys of Board approved church groups such as Women’s Alliance, Sarah Joslyn Society and Preserve Our Building) and invest them with Capital Trust investments. (Section 8B.) This would enable the Capital Trustees to invest general Church funds which the Board and Treasurer are not equipped to do, or do as efficiently. Also, a larger investment pool permits more investment diversity which provides greater safety.
3. Miscellaneous (cleanup) amendments.
a. Specifically reference the state “prudent investor” law with respect to trustees investing moneys. (Section 6(e).) Almost 20 years ago the Nebraska Unicameral enacted a “prudent investor” law specifically addressing the legal responsibilities of
trustees such as the Capital Trust trustees.
b. Clarify that the requirement for an annual audit is in the discretion of the Church’s Board of Trustees. (Section 13.) Annual
audits can be expensive – and probably unnecessary when investments are simple and held for the long term.
The resolution to be voted on at the Annual Meeting:
Resolution to approve amendments to The First Unitarian Church of Omaha, Nebraska, Capital Trust, in particular (1) to provide that Trust Asset earnings be reinvested instead of automatically distributing them, but permit the release of no more than 4% of the net assets of the Trust in a given fiscal year if needed to pay budgeted Church expenses, (2) to permit the Capital Fund Trustees to also invest other Church funds upon request, and (3) to clarify that Nebraska state laws regarding trustee investments apply to this Trust, and that it is in the discretion of the Church Board of Trustees whether to annually appoint an auditor to review the investments and accounting of the Capital Trust.
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