The Custodial Fund Agreement is effective as of the date signed, and is between The Baptist Foundation of California, a nonprofit corporation, whose mailing address is 3210 E. Guasti Road, Suite 640, Ontario, CA, 91761 and the ministry (participant) signing up through this online application, whose mailing address is listed on the application. Participant has or will transfer to Foundation the total sum indicated in the application. The asset so transferred, together with any additional assets transferred to the Foundation by the Participant for manaegment under this Agreement, will be held and invested in accordance with the terms of the Custodial Agreement incorporated herein and the policies included in the attached Information to Participants booklet and addendum. We, the undersigned, certify that we are duly authorized to execute this agreement on behalf of the Participant. In the future administration of this account, any two or more of the individuals below may sign on this account. We further certify that the Participant has read, understood and agreed to all statements in the Information to Participants booklet and addendum provided by The Baptist Foundation of California. The Foundation has the right to rely on the information provided in this application (and any subsequent notices) and will be held harmless when responding to the authorized signatories.
This Information for Participants describes the availability of certain Common Investment Funds andportfolios, and the terms and conditions under which The Baptist Foundation of California offers itsinvestment services to Baptists and other qualifying charitable organizations. This Information for Participants is given in compliance with the Philanthropy Protection Act of 1995, and is addressed only to organizations in the categories described below (see “Eligible Participants”). This Information for Participants is not intended to be distributed to any other person or entity, or for any other purpose
THIS INFORMATION STATEMENT HAS NOT BEEN REVIEWED OR APPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER FEDERAL OR STATE REGULATORY AUTHORITY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
There are certain investment risks associated with participation in the Common Investment Funds as described in this Information for Participants. This disclosure statement is published annually. Current information is available upon request.
THE BAPTIST FOUNDATION OF CALIFORNIA IS NOT REGISTERED AS AN INVESTMENT ADVISER AND DOES NOT PROVIDE INVESTMENT ADVICE TO PARTICIPANTS OF THE COMMON INVESTMENT FUNDS OR PORTFOLIOS DESCRIBED HEREIN. INVESTMENT ADVICE, IF ANY, TO PARTICIPANTS OF THE COMMON INVESTMENT FUNDS OR PORTFOLIOS SHOULD BE PROVIDED BY SEPARATELY COMPENSATED THIRD PARTY INVESTMENT ADVISERS WHO ARE REGISTERED UNDER FEDERAL AND/OR STATE LAW OR ARE EXEMPT FROM SUCH REGISTRATION.
In the fulfillment of its mission, the Foundation seeks to serve Baptists, their institutions and other Christian entities by offering investment opportunities that are capable of being socially screened and diversified in ways that individual investors may not otherwise be able to achieve. The Foundation also seeks to build endowments for Baptist ministries at state, national and worldwide levels through present, deferred and planned gifts.
The Foundation, responding to the Biblical challenge of responsible stewardship, calls for consciousinvestment decisions consistent with Christian morality and ethical principles. Investment objectives of the Funds are pursued with consideration for Christian moral and ethical values of investing. The Foundation encourages investment in those corporations that promote the common good and avoids investment in companies whose principal business activities are inconsistent with Christian moral and ethical values. An overview of the social screening characteristics applied to equity and debt investments is described in The Baptist Foundation of California Investment Policies. These policies will be made available upon request.
The Foundation manages funds for entities or trusts which fall into one or more of the following categories of eligible Participants: (i) Baptist institutions, agencies, commissions, foundations, organizations, associations and churches which are recognized as exempt from federal income tax under 501(c)(3) of the Internal Revenue Code of 1986 as amended (“charitable entity”) and who are affiliated with the California Southern Baptist Convention, the Southern Baptist Convention or other state Baptist Conventions (“Baptist entity”); or (ii) a trust with either its total remainder or its income for a predetermined period designated for charitable organizations in accordance with IRS guidelines with at least half of the distributions designated to be made to a Baptist entity; or (iii) such other qualified charitable trusts or charitable entities, which may or may not be affiliated with said Baptist Conventions, the funds of which the Board of Directors of The Baptist Foundation of California has determined would be appropriate to receive and administer. None of the funds invested with the Foundation may be held as part of a Participant’s retirement plan.
The following is a summary of the two basic investment options available to churches and associationswishing invest with the Foundation. There is an additional equity option that is more fully described in an expanded version of the Information for Participants. These Funds have been created to meet the investment requirements for the different types of accounts under administration.
The Cash Fund’s objective is liquidity and a nominal rate of return. This Fund is designed for short terminvestment of funds when the timing of the investor’s liquidity needs is uncertain or variable. Thebalance of the Cash Fund as of December 31, 2018 was $ 6,509,298.
The Mid-Term Income Fund’s objective is current income and preservation of principal for mid-termmanaged accounts with investment horizons of one (1) to two (2) years. This Fund is totally invested inchurch paper, including church loans and church bonds.
This Fund currently pays an annual stated return of two percent (2.5%). Church loans consist of loansto churches primarily for the purchase of land and refinancing existing facilities. All church loans aresecured by first deeds of trust on the property and have maturities of up to five (5) years. Churchbonds are issued primarily for new construction, upgrading existing facilities or refinancing existingdebt. Church bonds are secured by first deeds of trust on the property and have maturities of up tofive (5) years. The balance of the Mid-Term Income Fund as of December 31, 2018 was $4,383,043.The weighted average maturity on investments in the Mid-Term Income Fund is 3 years.
The Long-Term Income Fund’s objective is current income and preservation of principal for long-termmanaged accounts with investment horizons of more than three (3) years. Funds that are withdrawnbefore the three year term is completed will have the interest paid on those funds reduced to theMid-Term rate. This Fund is totally invested in church paper, including church loans and church bonds.Church loans consist of loans to churches primarily for the purchase of land, new construction orrenovation of existing facilities. This Fund currently pays an annual stated return of three and onequarter percent (3.25%). All church loans are secured by first deeds of trust on the property and havematurities of up to ten (10) years. Church bonds are issued primarily for new construction, upgradingexisting facilities or refinancing existing debt. Church bonds are secured by first deeds of trust on theproperty and have maturities of up to thirteen (13) years. The balance of the Long-Term Income Fundas of December 31, 2018 was $16,317,130. The weighted average maturity on investments in the Long-Term Income Fund is 7 years.
Approximately 36% of the Foundation’s investments are primarily invested in church bonds and church loans. These investments differ significantly from other investments because there is a very limited secondary market for the sale of this class of assets. Accordingly, these bonds and loans pose a liquidity risk, meaning that they cannot be readily sold to cover cash needs. Historically, the Foundation has held higher concentrations of church bonds and church loans and has always had sufficient liquidity to meet withdrawal requests. The Foundation maintains an average cash balance of 15% of the total “at will” managed accounts, meaning the Mid-Term and Long-Term Income Funds which are described in detail above. Earnings on the investments continue to be sufficient to meet scheduled monthly, quarterly and annual distributions to Participants and to allow the Foundation to continue to build future reserves. To manage the liquidity risk, the Foundation’s Trust Administrative Committee meets regularly to review the liquidity needs of each of the pools. In addition, on all accounts that are “at will or quasi at will” (the Mid-Term and Long-Term Income Funds), the Foundation, through signed management agreements with the account holders, has reserved the right to distribute assets in the pools “in-kind,” (direct distribution of the pool assets, i.e. bonds, loans, etc.) rather than require a liquidation of its holdings. Each of these account holders are also required to annually project the investment time-horizon of their specific funds.
Each organization wishing to invest in one or more of the Foundation’s Funds described above must sign an Investment Custodial Agreement. Once the signed Agreement and assets are received in the Foundation’s office, investments are made in the desired Fund(s). All investments made pursuant to the Agreement will be held in the name of the specified Fund for the benefit of the Fund participants. The assets in the Fund are not held in the name of the Foundation. Each investing organization is responsible for choosing one or more of the Funds into which it wishes to direct its investment. Purchases and withdrawals may be made in the form of check or wire transfer.
Fees for managed funds apply to those accounts eligible to be held in Common Investment Funds. These fees apply to church, associational, and charitable organizational accounts held for charitable purposes. All managed fund fees are annual rate fees, prorated monthly, and fees include all management, advisory, custodial, transaction and accounting fees. Fees are subject to change. The Fund fee for both Mid Term and Long Term is 1.25%
The fee is calculated on the Participant’s entire asset balance in the Fund and charged at the Fund level.
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Document Name: Custodial Agreement
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