The investment of ISA’s reserves is under the jurisdiction of the Treasurer, the Finance Committee; and the ISA’s Executive Director and the ISA Director of Operations & Finance* will be responsible for executing the broad policy guidelines enacted by the Governing Council .
The Governing Council has mandated that ISA invest only in socially responsible instruments of investment.
Four percent of the reserves each year are automatically returned to the general operating fund of the association. This 4% is based on the average balance of the Reserve fund over the previous three years.
The reserves are to be used for the following purposes
Maintenance of a “rainy day fund” that will allow the association to respond to any major fiscal emergencies (such as the failure to execute an annual conference and meet attrition obligations contracted). This amount should roughly equal the amount of budgeted revenue from its Annual Convention.
It is assumed that in addition to the “rainy day fund” and transition expenses, the association’s reserves are available for enhancement of membership services, as directed annually by the Governing Council.
Funding should be set aside from the reserves for transition costs involving the movement of ISA headquarters from one Executive Director (and institution) to another.
Investment Criteria and Guidelines
Investments are to be managed with the goals of achieving a rate of return that realizes increasing asset value (relative to inflation) and one that compares favorably with relevant market indicators. Investments are to be managed with relatively low overall risk to principal.
The Reserve funds not specifically designated for specific purpose (such as Member Services, Rainy Day or Transition) should follow these investment criteria:
- tying funds to market indexes, particularly the S&P 500 Index
- investing across an international spectrum; and
- reflecting "socially responsible" criteria in investment choices.
In practice, ISA has invested in a professionally managed equities investment fund that specializes in socially responsible investments while also holding cash and certificates of deposit. The Finance Committee provides oversight of fund performance and may select new socially responsible investment vehicles to replace poorly performing ones. The Finance Committee reviews the reserve funds’ performance and determines monthly allocations of operating budget surpluses into new investment in the market via dollar-cost-averaging.
Criteria for socially responsible investments: ISA uses four principle or essential social screens for all ISA endowment investments; these include respect for human rights, respect for labor relations and rights, respect for the environment, and no investment in the military/defense industry. Additional socially responsible screens may also be considered if their application does not limit or adversely affect the market performance potential of our investments.
* In all of the above, references to the position of ISA Director of Operations & Finance may change with ISA-HQ organizational structure and the title of this position may change over time.