PART 2: Your questions about Blandin Foundation, answered.
Today we welcome Brian Nicklason, chair of the Investment Committee and board member for Blandin Foundation. Brian is president and CEO of Woodland Bank, with offices serving the northern Minnesota communities of Deer River, Cohasset, Hill City, and Grand Rapids. He has been a board member of the Foundation for 11 years.
Last month, I, along with Blandin Foundation board chair Mike Johnson and president Dr. Kathy Annette, presented at the monthly Grand Rapids Chamber of Commerce Luncheon. There, we answered commonly-asked questions about how the Board of Trustees guide the work of the Foundation. As chair of the Investment Committee, I had the opportunity to explain how the Foundation manages its assets and distributes its money received from the Residuary Trust.
As trustees, we recognize that our highest and best purpose is to uphold our fiduciary responsibility and good stewardship, making sure that the money C.K. Blandin left to his Foundation continues to strengthen rural communities in Minnesota. What better way to carry out that responsibility than to oversee the assets he left to our community!
After thinking through some of the questions our community might have about how Blandin Foundation operates financially, I’ve put together the top 5 questions that I think paints a full picture of the work the Investment Committee does.
- Where did Blandin Foundation’s money come from?
The Charles K. Blandin Residuary Trust was established in 1958 as a legal separate entity responsible for investing and growing the assets of the endowment and the principal source of funds for Blandin Foundation charitable activities. Money from that trust is distributed annually to the Blandin Foundation. So there are actually two pots of money that feed Blandin Foundation’s work – money distributed from the trust and the Foundation’s own assets.
Since the foundation’s creation, there have been two large infusions of money, $1 million into the Blandin Foundation by C.K. Blandin himself and then approximately $77 million into the Residuary Trust after the sale of Blandin Paper Company in 1977.
These funds have fluctuated over time, but today combined assets are around $432 million.
- How is the Investment Committee similar to or different than the Board of Trustees?
The Investment Committee is made up of seven board members appointed by the board chair. In addition, two industry experts, Mike Sullivan and Trisha Lansing, sit on the committee to provide advice and guidance. The Investment Committee meets quarterly, similar to the board.
- What does the Investment Committee do?
The Investment Committee’s biggest job is to manage Blandin Foundation funds in perpetuity by establishing an investment policy statement, educating the committee on investment concepts and vehicles, defining and determining risk, reviewing investment performance, and sometimes influencing it. We do this in a number of ways.
Every three years, we do an asset allocation survey of the trustees, staff and industry experts. Based on the data collected, we set asset allocations consisting of a minimum and maximum ranges and a target range for our investment managers. Abbot Downing, a branch of Wells Fargo, manages our investments, and guided by the investment policy statement works within the range we give them to make appropriate investments throughout the year.
We also analyze the investment management fees on an annual basis. DeMarche, an investment advisor firm, conducts a study every year measuring our fees against benchmarks. Through this research, we are confident that our fees remain competitive.
Jeff Hoffman, a DeMarche employee, who also attend the Investment Committee meetings, oversees and analyses the investment work Abbot Downing is doing to make sure they are following our policies and that the numbers look right.
In addition to the work Jeff does, to make sure our investments are on track, we compare our investment performance to investment industry benchmarks. It gives us a way to gauge ourselves compared to our peers and standard in the investment arena.
The last thing we do is develop and recommend prudent investment policies to the full board. There are several policies including the investment policy statement which are reviewed annually by the Committee and Board. New investment policies are developed on an as-needed basis.
While there are many safeguards in place to make sure Blandin Foundation’s assets are well-managed, we have given Abbot Downing authority to invest and manage Blandin Foundation funds.
- Why does Abbot Downing manage Blandin Foundation’s investments?
This goes back to Charles Blandin’s will. As a community banker, I really appreciate loyalty and Mr. Blandin was very loyal to Northwestern National Bank, which helped him in financing his purchase of the St. Paul Pioneer Press and the paper mill in Grand Rapids, Minnesota. So when he formed the trust, he determined that Northwestern National Bank will manage and oversee this money as one of the trustees of the Residuary Trust. The second trustee to oversee the Residuary Trust is considered the individual trustee and currently is a local person. Wells Fargo, corporate trustee of the trust, has appointed Jim Rockwell, and the individual trustee is Jim Hoolihan. The Foundation has a separate board which governs the charitable activities including grant making, program operations, and administration of the Foundation.
The Blandin Foundation does not have the same type of legal restrictions as the Residuary Trust. As such we could use anyone to manage our investments, but we have found that by pooling the assets of the Blandin Foundation and the Residuary Trust together we can get better fees and returns. So we work closely with the Jim Hoolihan and Jim Rockwell to co-invest these separate funds.
- How have Blandin Foundation’s investments done over the last 10 years?
The market has seen some high highs and low lows in the last 10 years, and Blandin Foundation has ridden the wave like most organizations. In April 2006, our total asset base was $448 million. When the recession hit, our total assets dropped to $295 million. Despite the drop, we kept our annual budget at about $20 million, maintaining consistent funding for grants and programs.
Today, we have climbed back to $432 million, something we are very proud about.
Knowing that we want to be in the community forever, we have to be a little more conservative about our investments. We have survived some high-stress times, but have been able to continue carrying out our mission, like we always will.
We take a lot of pride in partnering with quality people and have great procedures and policies that will lead us forward. I’m very hopeful for the future and that we will continue to do good work.
If you have any further questions about how Blandin Foundation manages its money, do not hesitate to contact Jean Lane, Director of Finances.