Mississippi Baptist Foundation
Friday, June 05, 2020

MBF Disclosure Statement

Updated November 2019

 

Since 1943 the Mississippi Baptist Foundation has served as the trust agency of the Mississippi Baptist Convention, offering a means whereby Mississippi Baptists can provide current and perpetual support for Kingdom work. In this role, the Foundation comes alongside Mississippi Baptist individuals as an encourager of estate stewardship, and alongside churches and institutions as a money management partner.

 

Tools utilized by the Foundation include endowments, gifts of appreciated assets (stocks, mutual funds, real estate, etc.), charitable remainder trusts, charitable lead trusts, charitable gift annuities, and other deferred gifts (life insurance, zero-coupon bonds, etc.). The Mississippi Baptist Foundation is a charitable organization exempt from income taxation under §501(c)(3) of the Internal Revenue Code. Contributions to the Mississippi Baptist Foundation are deductible for income, gift, and estate tax purposes under §170(c), §170(b)(1)(A), §2055 (a), and §2522 of the Internal Revenue Code. The Foundation is audited annually by an independent firm.

 

The Mississippi Baptist Foundation ministers under the direction of a Board of Trustees who are elected and approved annually by the Messengers of the Mississippi Baptist Convention. As a Mississippi Baptist agency, the Foundation receives partial funding through a Cooperative Program allocation.

 

Funds administered by the Mississippi Baptist Foundation (MBF) are managed according to the Investment Policy instituted by the Trustees. With the goal of receiving maximum returns on investments with minimalized risk and volatility, the Foundation utilizes supplementary active investment managers. These active managers also assist the Foundation in avoiding investments with companies whose primary products or services are inconsistent with traditional Christian principles and values. Supplementary active managers are selected and evaluated at least annually based on strategy, method, and performance by the Board of Trustees. These managers are monitored by the Foundation staff and MBF Investment Committee.

 

Assets administered by the Foundation totaled $152,512,571 as of June 30, 2019. Total distributions to benefit ministry causes tallied $6,591,871 during fiscal year 2019. During the past ten years, the Lord has used the Mississippi Baptist Foundation to provide nearly $64 million to Kingdom work. Beneficiary ministries include churches, associations, the Baptist Children’s Village, Mississippi’s three Baptist colleges, Mississippi Baptist Student Union ministry, the International and North American Mission Boards of the Southern Baptist Convention, Camp Garaywa Camp and Conference Center and Central Hills Baptist Retreat, the six Southern Baptist seminaries, the ministry of the Mississippi Baptist Convention, and others. Net income distributions are made regularly to designated recipients.

 

Asset Management


MBF Common Investment Pools

Capital is managed by the Mississippi Baptist Foundation within six main investment pools.

The MBF Equity Fund is made up of a diverse portfolio of stocks invested in U.S. and international companies, benchmarked against the MSCI All Country World Index.

The MBF Fixed Income Fund is comprised of bonds and closed-end bond funds, invested primarily in U.S. government and corporate bonds, benchmarked against the Barclay’s Capital Aggregate Bond Index.

Alternate Investments apply a combination of mathematical, statistical and technical analyses, pattern recognition, and macroeconomic models aimed at profiting from market trends of differing durations.

The MBF REIT Fund is made up of real estate investment trusts (or corporations). MBF holds approximately 35 different publically traded REITs.

The MBF MLP Fund consists of an open-ended mutual fund and a closed-end mutual fund. Master Limited Partnerships (MLPs), found primarily in the energy sector, are an investment that provides the Foundation greater income than the amounts received from individual bond holdings.  

The MBF Dividend Growth Plus Fund seeks investment primarily in large U.S. companies, known as Dividend Aristocrats, that have increased dividends in each of the last 25 years. Dividend Growth seeks to provide steady dividend income while maintaining exposure to the U.S. equity market.

 

Cash Management Services

Within the arena of cash management the Foundation offers the following services:

MBF Short-Term Fund – The MBF Short-Term Fund is comprised of U.S. Treasury and U.S. Bank issues, with some exposure to high-rated corporate bonds to gain additional return. The MBF Short-Term Fund is managed by the Southern Baptist Foundation.

MBF FDIC Money Market Fund – The MBF FDIC money market fund currently offers FDIC insured coverage up to $10 million. The investment is made via many FDIC insured banks, in order to maintain the proper level of FDIC insured coverage. The interest rate is variable, and can move up or down each month depending on interest rates offered on money market accounts by the banks that are utilized. The offering is made possible by the Foundation’s accounting vendor, FIS Charlotte, and Total Bank Solutions.

MBF Treasury Money Market Fund – The MBF Treasury Money Market Fund offers an institutional money market account that invests only in U.S. Treasury securities, therefore all funds are backed by the full faith and credit of the United States. The institutional Treasury money market is offered through the Morgan Stanley brokerage firm.

Purchase of national market Certificates of Deposit to meet specific needs of the client – In an effort to meet the cash management needs of Mississippi Baptist churches, the Foundation can purchase and manage Certificates of Deposit with varying maturities. The Certificates of Deposit are offered by banks located across the United States, and are FDIC insured.
 

As of June 30, 2019, assets under management of the Mississippi Baptist Foundation are invested according to the following allocation percentages:

Cash and Money Markets……..7.05% MBF Dividend Growth Plus……..4.39%
MBF Equity Fund……………34.77% MBF REITs………………….…..3.12%
MBF Fixed Income Fund…….44.94% MBF MLPs………………………1.86%
MBF Alternatives……………...2.25% Assets Outside Common Funds….1.62%
 
The MBF Common Investment Pools are exempt from federal securities laws registration requirements according to the exemption provided by the Philanthropy Protection Act of 1995 (P.L. 104-62) for collective investment funds and similar funds maintained by charitable organizations.
 
To support MBF operations and ministries, the Mississippi Baptist Convention approved in 2005 that the Trustees of the Foundation be authorized to implement and administer a Cost Recovery Assessment for asset management. The expense ratios, which include costs associated with the enlisted professional money managers and the MBF Cost Recovery Assessment, range from .65% to 1.05%. The actual costs for an account is dependent on the specific asset allocation among the Foundation’s various common investment pools.
 

Risk Assessment

Assets received by the Foundation are managed in a conservative and disciplined manner. In an effort to appropriately monitor and adjust levels of risk in investments, the Foundation routinely evaluates portfolio risk ratings and statistics. These analyses serve to help facilitate the Foundation’s protection of investments entrusted to MBF management for the benefit of Kingdom ministries and missions. Performance is evaluated in comparison to applicable market benchmarks.
 
Individuals and/or organizations placing investments in care of the Mississippi Baptist Foundation do so with the assumption of certain risks. Risks of investment include but are not limited to:
  • Market Risk – the variability of return directly related to fluctuations in the financial markets
  • Interest Rate Risk – risk resulting from changes in interest rates
  • Reinvestment Risk – the risk of reinvesting income and redemptions in changing interest rate environments
  • Inflation Risk – the reduction in purchasing power due to inflation
  • Exchange Rate Risk – the risk of changing one currency into another (applies only to international investments)
  • Business Risk – the risk of a company suffering losses, or producing lower profits than expected, because of adverse circumstances for that particular company or industry, not the market as a whole
  • Financial Risk – risk arising from the mix of debt and equity financing (the use of debt by a company introduces this leverage risk, which increases volatility in company profits)
  • Liquidity Risk – the chance that an asset might not be quickly sold for a fair price (money market funds have very low liquidity risk, whereas real estate presents higher liquidity risk)
  • Default Risk – the chance that an issuer will be unable to make the required payments on their debt obligations
  • Government and Political Risk – risk of the collapse or devaluation of a currency (a concern primarily in international investments)
The Mississippi Baptist Foundation recommends that all account holders consult their personal advisors regarding risks, tax treatments, and other factors regarding utilizing the ministry investment services of the MBF.
 

 

 

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Most of the information in this disclosure will not be relevant for individuals establishing gift annuities, primarily due to the substantiality that a gift annuity is not an investment. The Foundation’s obligation to fulfill annuity payments as determined in the charitable gift annuity agreement is endorsed by (a) the initial contribution and all earnings produced thereby, (b) general assets of the institutions and/or agencies benefiting from the gift that have committed to insure annuity payments, and (c) the general assets of the Mississippi Baptist Foundation.