MCC Canada Investment Policy - Mennonite Central Committee ...

INVESTMENT POLICYFinanceApproved by: Board of Directors Initial Approval: UnknownPolicy Owner: Director of Finance Revised:OBJECTIVE/BACKGROUNDMCC Canada maintains deposits of cash and short term investments to fund its operations. Thesedeposits include funds for working capital, deferred contributions, and internally restricted andunrestricted net assets. This policy provides the parameters for the investment of these funds. Theobjectives of the investment of these funds is to earn a reasonable return, while maintaining requiredoperating liquidity, preserving principal and investing in a socially responsible and ethical manner.POLICIES1. All investing activity shall be managed by external professional investment managers2. All Investments shall be in low risk investments.3. All investments shall be in keeping with MCC Canada’s faith convictions.4. All investments shall be in Canadian Dollars.5. Any deviations from the investment policy shall be reported to the Executive Director and theTreasurer immediately.6. The investment policies shall be regularly reviewed.PROCEDURES1. Portfolio management: All investments will be managed by Mennonite Foundation ofCanada (MFC) who use Great West Life to manage their fixed income portfolio.2. Risk rating of issuers of securities: Bonds not backed by the Government of Canada orProvincial Governments must have a minimum credit rating of BBB. The DBRS and S&Pratings will be used to determine the appropriateness of the bond. In the case of adiscrepancy between the two rating agencies the most conservative credit rating will be used.The rating trend for the debt issued by the corporation is also considered.3. Approved securities:a. Bonds backed by the Government of Canada or Provincial Governmentsb. Securities (e.g. Certificates of Deposit, Term Deposits, Bankers Acceptances, Bonds)of any Bank or Credit Union licensed to do business in Canada.c. Money Market Mutual Funds where the investment objective of the fund is similar tothe objectives of this investment policy.4. Specifications regarding approved securities: For greater clarity, the followinginvestments are specifically prohibited:a. all common and preferred stockb. futures, options or any derivative securitiesc. commoditiesd. any investment denominated in a foreign currencye. securities convertible into stockf. mortgage and asset-backed securities

INVESTMENT POLICYFinanceg. mutual funds except money market funds5. Term to maturity: The length of term for investments will be primarily guided by the need tomaintain liquidity. The Director of Finance will consult with the Executive Director and theDirector of Program on a regular monthly basis to establish the best estimates of cash flowrequirements.6. Socially responsible and ethical investments: All investments managed by MFC must beconsistent with MFC’s social screening criteria. Meritas Financial Inc. provides MFC with theoversight to the social screening due diligence of the bond portfolio.If MFC receives information, which reveals that an investment it holds violates its socialscreening criteria, it will sell the holdings within a period of one year. MFC also considers theuse of proxies or letters as legitimate ways to voice concern.7. Specifications regarding social screening criteria: MFC uses, but is not limited to, thefollowing criteria to evaluate companies in which it may consider investing:a. Respect the dignity and value of all people – MFC will seek to invest in companiesthat respect and support the basic human rights of all people and who do not attemptto benefit from the misfortunes that may befall disadvantaged individuals orcommunities. This includes providing fair and sustainable compensation foremployees and sub-contractors and extending opportunities to disabled,disadvantaged, and marginalized people.b. Support world peace – MFC will seek to invest in companies whose activities andpractices contribute to peaceful and healthy relationships between individuals,communities, nations, and within society in general. Therefore, MFC will avoidinvesting in companies whose focus is in the development, production, and sale ofweapons and other instruments of war and destruction. MFC will also avoidcompanies that manufacture abortion related equipment.c. Promote social betterment – MFC will seek to invest in companies that worktowards building healthy families and communities by providing some fulfillment inareas such as housing, environmental control, food, education, and health care.Consequently, MFC will avoid investments in companies materially engaged in theproduction and sale of liquor, tobacco, pornography, and gaming.d. Observe management practices – MFC will seek to invest in companies thatoperate in an honest, compassionate, and responsible manner, value and empoweremployees, respect workers rights, engage in responsible resource management,employ sound practices of corporate governance, avoid unnecessary litigation andpursue alternative dispute resolution options, and are competitive but respectful oftheir competitors.e. Seek church opportunities – MFC will look for opportunities to employ resources inways that will contribute to the work of the church.8. Diversification: Although the approved types of investment funds are very conservative, theportfolio should not be held in any one instrument.9. Out of Compliance Reporting: All situations out of compliance with the investment policymust be reported immediately to the Executive Director and the Treasurer. Together they willdetermine resolution and together they may waive compliance for a maximum of 3 monthsper occurrence. The out of compliance situation must be rectified within this three-monthperiod and it will be reported to the Board of Directors on an ongoing basis until resolution.10. Review of Policy: This policy will be reviewed annually, starting within 60 days of the end offiscal year. The Audit and Finance Committee will review and make recommendations forchanges, if required, to the Board of Directors.