Hi Friends,

I'm in the (very) early stages of creating a financial endowment fund for a small non-profit community organization I help out with. I feel they're a good fit for such an investment vehicle: their current revenue stream fluctuates a bit and many of their events rely heavily on attendance fees for funding, which is unrealistic when they attempt to cater to lower-income demographics. However, they have a relatively wealthy patronage that tends to remain involved for years or decades, and I believe they have the institutional stability to operate more complex financial instruments.

I pitched the idea of an endowment at a high level to the Chairwoman last week, and the Board is interested in moving forward. We haven't decided how exactly we want to structure the endowment yet: restricted endowment, quasi-endowment, etc. We also haven't determined exactly how much money we should fundraise for a principal investment, what our portfolio spread should look like, and how much of the annual interest we can afford to spend. (I have estimates, but they're not final.) I'm particularly interested in resources that can help the institution plan for inevitable economic downturns.

Has anyone here done this kind of work before? If so, would you be willing to chat about some of the nuances of organizing it, and/or do you have recommendations on reading material to help with the creation and maintenance of such a fund? We plan to receive consultations from an accountant and a lawyer, but I don't have much formal background in finance and would welcome any experience, advice, warnings, or external resources Tildesians can offer.

Thanks,
Atvelonis

I didn't find any great links so made this a self post. Here are some just from Google but they mainly just say what's on the tin:

https://www.bloomberg.com/news/articles/2022-07-11/euro-plunges-to-fresh-two-decade-low-as-dollar-runs-rampant

https://www.cnn.com/2022/07/11/investing/euro-dollar-parity/index.html

https://www.reuters.com/markets/us/safe-haven-dollar-stands-tall-inflation-energy-jitters-2022-07-11/

As of 5:00 pm Eastern on July 11th 2022, if you check the exchange rate, the dollar is now 1:1 with the Euro.

In terms of effects, it seems complicated. Europe has a decently export heavy economy, unlike the US (for which only 10% of its GDP comes from manufacturing), so a weak Euro will help that.

However, it will make all imports more expensive. This is another supply shock, as most of continental Europe already faces heavy issues with regards to energy given the sanctions on Russia, one of the primary energy providers.

So it will certainly make domestic inflation worse (note: domestic inflation and the value of the currency on FX are different things - although they can mutually affect each other). If nothing else, the LNG Europe is buying from the US will be more expensive. The ECB has struggled to raise interest rates to fight inflation given Spain and Italy's high debt levels, and this won't help.

Winter could potentially be very, very bad.

For the US, a strong dollar is probably fine. The US is not a heavy export country, and the dollar surge helps cement reserve currency status from which the US gets a number of benefits. A slowdown in exports will also help tamper inflation.

The pound for the most part has tracked with the Euro, brexit or not.

For example Vanguard Russell 2000 Growth ETF shows a pe ratio of 19.5 on it's portfolio page, but etf.com (which reportedly calculates PE ratio in the "logical" method we probably all think of) says it's 236.89.

There is also the russel 2000 etf, which shows 14.3 on vanguard and 43.63 on etf.com (I saw no clear indication on the vanguard website they are removing losing companies), ishares does say that for it's etf.

I want to know the PE ratio because economic bubbles (like the dot comm bubble and japan stock market bubble) were characterized by very high pe ratio, and there is historical evidence low pe performs better (probably because of the optimism bias).

I can use etf.com, but would like another source to validate etf.com is reporting correctly .

I have mixed views on arbitration, it does lower costs, but arbitrators rarely see things from the consumers' perspectives.

Here are the instructions for opting out, which I will be recommending to all my friends (followed by a link to the form):

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The form:

https://help.venmo.com/hc/en-us/articles/360062640153