Ask the Trustees

Q:

Recently there’s been a lot of volatility in the stock market. How does that effect Donaghue’s portfolio and its ability to continue to fund grants at the same level?

A:

It’s true. After a relatively sustained period of growth over the past couple of years, the last several weeks have seen significant drops in the value of many stocks only to rebound within a few days. And then drop again and then rebound again.

One aspect of the trustee’s responsibility is to look toward the long term. We work with our U.S. Trust, Bank of America financial advisor to develop a diversified portfolio of stocks and fixed income assets that will provide for the Foundation’s mission for many years to come. As many of our awards are multi-year grants, ensuring that we have the ability to keep those commitments is our number one priority. But we also want to have the ability over the longer-term to provide for Ethel Donaghue’s mission. Therefore, we focus our strategic allocation on a portfolio of securities that will be resilient to the shorter term fluctuations of the market and enable us to keep making grants in the future. And though we will make tactical adjustments to the portfolio in light of current market conditions, once we set the long term investment policy we don’t deviate from it unless there are more structural reasons to change it. This means that we are willing to accept a certain degree of short term volatility in light of the long term benefits to the portfolio and our grant recipients.