Policy:Wikimedia Foundation Investment Policy: Difference between revisions

Add links
From Wikimedia Foundation Governance Wiki
Browse history interactively
← Older edit
Content deleted Content added
VisualWikitext
mNo edit summary
m translation improvements
Tag: 2017 source edit
 
(23 intermediate revisions by 3 users not shown)
Line 1: Line 1:
<languages />{{DISPLAYTITLE:Wikimedia Foundation Investment Policy}}
{{policy}}
{{policy}}


== {{int string|Purpose}} ==
'''Wikimedia Foundation Investment Policy'''


<translate><!--T:2-->
'''Approved April 19, 2018'''
The purpose of the Wikimedia Foundation ("the Foundation") is to be the home of free-knowledge projects like Wikipedia. In order to serve this mission, the Foundation's investment portfolio is intended to provide both short-term and long-term financial support to the Foundation's current operations as well as its growth over time.


<!--T:3-->
==Wikimedia Foundation Investment Policy==
For the purposes of providing for sufficient liquidity, managing investment risk, and optimizing investment returns within acceptable risk parameters, the following funds shall be created and held as separate investment pools:


<!--T:4-->
===Introduction===
# Operating Fund
This statement of investment policy was adopted by the Wikimedia Foundation on May 8, 2018, to provide for the creation of, and guidelines for, the management of various funds held by the organization. This policy supersedes any and all actions pursuant to prior investment policies.
# Short-term Reserve Fund
For the purposes of managing investment risk and to optimize investment returns within acceptable risk parameters, the following funds will be created and held as separate investment pools:
#Operating Fund
# Long-term Reserve Fund
#Short-term Reserve Fund
#Long-term Reserve Fund - Sustainable Investing


== Roles and Responsibilities == <!--T:5-->
===Operating Fund===
</translate>
====Purpose of the Operating Fund====
The purpose of the Operating Fund is to provide sufficient cash to meet the day-to-day financial obligations of the Wikimedia Foundation in a timely manner.
====Investment Objectives====
The investment objectives of the Operating Fund are:
#Preservation of Capital.
#Liquidity.
#The optimization of the investment returns within the constraints above.


=== {{minutes|string=audit committee}} ===
====Investment Guidelines====
''Allowable Investments''


<translate><!--T:7-->
The Treasurer will invest the Operating Fund as follows:
The Board of a non-profit organization is ultimately responsible for its investments. The Wikimedia Foundation Board of Trustees ("the Board") has [[<tvar name="1">Special:MyLanguage/Committee:Audit Committee/Charter</tvar>|delegated to the Audit Committee]] ("the Committee") the fiduciary responsibility to oversee the Foundation's investment activities.
#Interest bearing savings account.
</translate>
#Insured Certificates of Deposit at registered commercial banking organizations.
* <translate><!--T:8--> The Committee shall monitor investment performance semi-annually.</translate>
#Registered money market mutual funds.
* <translate><!--T:9--> The Committee shall review the Investment Policy Statement ("the Policy") periodically to ensure it is consistent with the mission of the Foundation and accurately reflects current financial conditions.</translate>
#Checking accounts.
* <translate><!--T:10--> The Committee shall approve any changes in the Policy and notify the Board of those changes.</translate>
#Direct obligations of the U.S. Government, its agencies and instrumentalities.
<translate>
#Repurchase agreements collateralized by U.S. Treasury obligations.


=== Treasurer === <!--T:11-->
''Maturity''


<!--T:12-->
The maturities of investments for the Operating Fund shall be 12 months or
The Committee authorizes the Foundation's Treasurer to implement the Policy, including executing investment transactions directly or via professional investment managers consistent with the "Delegations of Financial and Spending Authority" approved July 11, 2012 by the Board of Trustees which is incorporated into this Policy by reference.
less.


<!--T:13-->
====Reporting====
It is anticipated that the services of investment managers and/or advisors may be sought to manage portions of the funds. The Treasurer is authorized to hire, fire, or replace investment managers and/or advisors with notification to the Chair of the Audit Committee. The Treasurer must approve allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.
The Treasurer will provide a copy of the investment statement(s) to the Chair of the Audit Committee on a quarterly basis with reports available to the Board of Trustees upon request.


====Financial Performance Benchmark====
==== Performance Monitoring ==== <!--T:14-->
3 Month Treasury Bill


<!--T:15-->
===Short-term Reserve Fund===
The Treasurer shall monitor and evaluate investment performance quarterly. The Treasurer shall report investment performance and provide a copy of the investment statement(s) to the Committee on a semi-annual basis. The Treasurer shall report annually to the Committee on the overall Environmental, Social, & Governance ("ESG") profile of the portfolio using publicly available ESG ratings, as appropriate.


== Spending Policy == <!--T:16-->
====Purpose of Short-term Reserve Fund====
The purpose of the Short-term Reserve Fund is to meet the expenses incurred as a result of unanticipated activities and to improve the return on the funds held for expenditure beyond twelve months.


<!--T:17-->
====Investment Objectives====
The Foundation will use funds in the Operating Fund to meet the day-to-day financial obligations of the Foundation. The Foundation may withdraw funds from the Short-term Reserve Fund or the Long-term Reserve Fund, in line with approved spending in our annual plan and in line with maintaining [[<tvar name="1">Special:MyLanguage/Resolution:Setting Working Capital Reserve Target</tvar>|the working capital ratio established by the Board of Trustees]]. The objectives of the spending policy are to grow the purchasing power of the funds and to achieve a predictable distribution of funds to aid budgeting.
The investment objectives of the Short-term Reserve Fund are:
#Preservation of capital.
#Liquidity.
#The optimization of the investment returns within the constraints above.


<!--T:18-->
====Investment Guidelines====
Any material withdrawal of funds from the Short-Term Reserve Fund or the Long-term Reserve Fund outside of approved spending in the annual plan or the normal expectations of adequate working capital ratio must be communicated to the Board prior to withdrawal and material use of funds.
''Allowable Investments''


== Operating Fund == <!--T:19-->
The Treasurer will invest the Short-term Reserve Fund as follows:
#Domestic fixed and variable rate bonds, notes and bills issued by the U.S. Government or its agencies.
#Domestic fixed and variable rate bonds and notes issued by U.S. domiciled corporations, non-U.S. based corporations and governments and multinational organizations (e.g. World Bank, IADB, EDS).
#Mortgage-backed securities (MBS) issued by U.S. government agencies or government sponsored enterprises (i.e. GNMAs, FNMAs, FHLMCs) or by corporate issuers, collateralized mortgage obligations collateralized by otherwise eligible mortgage-backed securities ("CMOs"), interest only and principal only (PO) securities are also eligible.
#Asset-backed securities ("ABS").
#Taxable or tax-exempt municipal bonds and other municipal fixed income issues.
#Cash equivalent instruments including registered money market mutual funds, U.S. Treasury bills, bank certificates of deposit, time deposits or similar depository funds and commercial paper.
#Repurchase agreements collateralized by U.S. Treasury obligations.


=== Investment Objectives === <!--T:20-->
''Diversification, Credit Quality, Maturity and Other Guidelines''


<!--T:21-->
#All securities will have investment grade ratings of BBB- or better (Standard and Poor's) or Baa3 or better (Moody's) or the equivalent with the average credit quality of the portfolio shall be at least A- (Standard and Poor’s) or A3 (Moody’s). Securities with these investment grade ratings indicate a low risk of default.
The purpose of the Operating Fund is to provide sufficient cash to meet the day-to-day financial obligations of the Foundation in a timely manner. The Operating Fund shall prioritize preservation of capital and access to immediate liquidity in order to minimize risk to operational financial needs of the Foundation.
#With the exception of U.S. Government and agency securities, fixed income issues of a single issuer and its affiliates (defined below) shall at time of purchase constitute no more than 5% of the market value of surplus cash.
#Derivative securities such as but not limited to MBS, ABS and Collateralized Bond Obligations (“CBOs”) shall not contain underlying leverage.
#For purposes of diversification restrictions, "affiliates" are companies in which one company has an ownership stake of 20% or more in the other company and/or vice versa.


=== Investment Guidelines === <!--T:85-->
''Maturity''
</translate>
{| class="wikitable"
| <translate><!--T:22--> Time Horizon</translate> || <translate><!--T:23--> Less than 3 months.</translate>
|-
| <translate><!--T:24--> Return Objective</translate> || <translate><!--T:25--> Target short-term Treasury market rates.</translate>
|-
| <translate><!--T:26--> Risk Tolerance</translate> || <translate><!--T:27--> The volatility of the Operating Fund should be similar to its benchmark.</translate>
|-
| <translate><!--T:28--> Liquidity Needs</translate> || <translate><!--T:29--> The Operating Fund should maintain high liquidity (short to ultra-short/weekly to monthly range) in order to support the Foundation's day-to-day operations.</translate>
|-
| <translate><!--T:30--> Spend</translate> || <translate><!--T:31--> The Operating Fund shall aim to reserve four-to-six months of expenses on a rolling quarterly basis. Due to the timing of cash flows, the Foundation may – at times – either lag or exceed this level of liquidity in its Operating Fund.</translate>
|}
<translate>


=== Asset Class Mix === <!--T:32-->
The Short-term Fund shall have a weighted average maturity of two years or less with maturity up to four years on any single security.
</translate>
{| class="wikitable"
| <translate><!--T:33--> Cash & Cash Equivalents</translate> || <translate><!--T:34--> This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.</translate>
|-
| <translate><!--T:35--> Money Market Indexed Funds</translate> || <translate><!--T:36--> These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo" or "repos") exposure collateralized by US Treasuries is also permissible, where applicable.</translate>
|-
| <translate><!--T:37--> Public Fixed Income</translate> || <translate><!--T:38--> This Fixed Income allocation shall be comprised of direct obligations of the US Government, its agencies, and instrumentalities. Repos collateralized by US Treasuries are also permissible.</translate>
|-
| <translate><!--T:39--> ''Benchmark - to be based on asset mix and investment objectives''</translate> || <translate><!--T:40--> ''Bloomberg US T-bill 1-3 Month fixed income index.''</translate>
|}
<translate>


== Short-term Reserve Fund == <!--T:41-->
====Reporting====
The Treasurer will provide a copy of the investment statement(s) to the Chair of the Audit Committee on a quarterly basis with reports available to the Board of Trustees upon request.


=== Investment Objectives === <!--T:42-->
====Financial Performance Benchmark====
Bloomberg Barclays 1-3 Year Government/Credit Index


<!--T:43-->
===Long-term Reserve Fund – Sustainable Investing===
The purpose of the Short-term Reserve Fund is to improve the return on the funds held for expenditure beyond twelve months. The Short-term Reserve Fund shall prioritize preservation of capital and also aim to generate current income in line with its benchmark.


=== Investment Guidelines === <!--T:44-->
====Purpose of Long-term Reserve Fund====
</translate>
The purpose of the Long-term Reserve Fund is to support our initiative on environmental sustainability objective, in which, the assets shall be managed with sustainable investment mandate to facilitate the Foundation's goals and objectives as outlined by the Board resolution on environmental impact that was passed on February 24, 2017.
{| class="wikitable"
| {{tunit|22|Time Horizon}} || <translate><!--T:45--> 2.5 to 3.5 years.</translate>
|-
| {{tunit|24|Return Objective}} || <translate><!--T:46--> Target 2.5- to 3.5-year Treasury market rates and target total return (net of fees) in line with its benchmark.</translate>
|-
| {{tunit|26|Risk Tolerance}} || <translate><!--T:47--> The volatility of the Short-term Reserve Fund should be similar to its benchmark. This Fund is anticipated to be the least volatile segment of the consolidated Foundation portfolio.</translate>
|-
| {{tunit|28|Liquidity Needs}} || <translate><!--T:48--> The Short-term Reserve Fund should maintain intermediate-term liquidity, in line with the time horizon mandate.</translate>
|-
| {{tunit|30|Spend}} || <translate><!--T:49--> The current portion of the Short-term Reserve Fund may contribute to the Foundation's ongoing Operating Fund needs.</translate>
|}
<translate>


=== Asset Class Mix === <!--T:50-->
====Investment Objectives====
</translate>
The investment strategy of the Long-term Reserve Fund is to emphasize investment in companies that are focused on environmental stewardship and sustainability strategy while yielding a total return; that is, the aggregate return from capital appreciation and dividends, interest and other income.
{| class="wikitable"
| {{tunit|33|Cash & Cash Equivalents}} || <translate><!--T:51--> This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.</translate>
|-
| {{tunit|35|Money Market Indexed Funds}} || <translate><!--T:52--> These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo") exposure collateralized by US Treasuries is also permissible, where applicable.</translate>
|-
| {{tunit|37|Public Fixed Income}} || <translate><!--T:53--> The Fixed Income portfolio will consist mainly of investments in investment-grade marketable bonds (USD-denominated). Permissible securities may be issued by US Treasury, domestic US organizations, non-US corporations, non-US governments ("sovereign" bonds), and multinational organizations ("supranationals" like World Bank), municipalities ("munis"), commercial paper, and repos collateralized by US Treasuries.</translate>
|-
| {{tunit|39|''Benchmark - to be based on asset mix and investment objectives''}} || <translate><!--T:54--> ''Bloomberg 1-3-year Government Credit fixed income index.''</translate>
|}
<translate>


=== Other Guidelines === <!--T:55-->
The primary objective in the investment management of the Long-term Reserve Fund shall be:
</translate>
#Long-term growth of capital – To emphasize the long-term growth of principal while avoiding excessive risk. Short-term volatility consistent with the volatility of a comparable market index is anticipated, though management should strive to contain it.
# <translate><!--T:56--> Prior approval by the Foundation's Treasurer is required before allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.</translate>
#Preservation of purchasing power – To achieve returns in excess of the rate of inflation plus spending over the investment time horizon in order to preserve the purchasing power of the assets of the Long Term Reserve Fund. Risk control is an important element in the investment of Trust assets.
# <translate><!--T:57--> With the exception of U.S. Government and agency securities, fixed income issues of a single issuer and its affiliates (ownership stake of 20% or more) shall at time of purchase constitute no more than 5% of the market value of the Short-term Reserve Fund portfolio.</translate>
#Sustainable Investing portfolio – Focus on companies with a superior sustainability profile, particularly relating to environmental factors. Such companies are believed to have less inherent risk in their business models and may offer opportunities to outperform the benchmark in the long run.
# <translate><!--T:58--> Maturity (using preferred metric of expected maturity) of any individual holding shall not exceed six years. Weighted average duration of the portfolio shall be aligned with the Time Horizon of the Short-term Reserve Fund.</translate>
<translate>


== Long-term Reserve Fund == <!--T:59-->
====Investment Guidelines====
''General Principles''


=== Investment Objectives === <!--T:60-->
#Investments shall be made solely in the interest of the Wikimedia Foundation and the Long-term Reserve Fund.
#Investment of these funds shall be diversified as to minimize the risk of large losses, unless, under the circumstances, it is clearly prudent not to diversify in such a manner. The Wikimedia Foundation may employ one or more investment managers of varying styles and philosophies to attain the Long-term Reserve Fund's objectives.
#Cash is to be employed productively at all times by investing in short-term cash equivalents to provide safety, liquidity and return.


<!--T:61-->
''Specific Investment Goals''
The purpose of the Long-term Reserve Fund is to aid growth of invested assets and maintain the portfolio's inflation-adjusted purchasing power over a long-term. The Long-term Reserve Fund shall prioritize long-term growth while avoiding excessive risk. This Fund shall also aim to achieve returns in excess of the rate of inflation plus spending over a long-term (greater than 7-10 years).


=== Investment Guidelines === <!--T:62-->
The goal of any investment manager(s) selected to invest the assets of this fund is to meet or exceed the market index selected and agreed upon by the Treasurer which will closely correspond to the general principles stated above and the specific assignment of the investment manager.
</translate>
{| class="wikitable"
| {{tunit|22|Time Horizon}} || <translate><!--T:63--> Up to 4.5 years for fixed income while greater than 7 years for equities.</translate>
|-
| {{tunit|24|Return Objective}} || <translate><!--T:64--> Target total return (net of fees) in line with its blended benchmark.</translate>
|-
| {{tunit|26|Risk Tolerance}} || <translate><!--T:65--> The volatility of the Long-term Reserve Fund should be similar to its benchmark. This Fund is anticipated to be the most volatile segment of the consolidated Foundation portfolio.</translate>
|-
| {{tunit|28|Liquidity Needs}} || <translate><!--T:66--> The Long-term Reserve Fund shall be comprised of highly liquid assets while also aiming to minimize asset turnover (i.e. holding assets over a long term to promote investment growth and return).</translate>
|-
| {{tunit|30|Spend}} || <translate><!--T:67--> The current portion of the Long-term Reserve Fund may contribute to the Foundation's ongoing Operating Fund needs.</translate>
|}
<translate>


=== Asset Class Mix === <!--T:68-->
''Allowable Assets''
</translate>
{| class="wikitable"
| {{tunit|33|Cash & Cash Equivalents}} || <translate><!--T:69--> This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.</translate>
|-
| {{tunit|35|Money Market Indexed Funds}} || <translate><!--T:70--> These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo") exposure collateralized by US Treasuries is also permissible, where applicable.</translate>
|-
| {{tunit|37|Public Fixed Income}} || <translate><!--T:71--> The Fixed Income portfolio will consist mainly of investments in investment-grade marketable bonds (USD-denominated). Permissible securities may be issued by US Treasury, domestic US organizations, non-US corporations, non-US governments ("sovereign" bonds), and multinational organizations ("supranationals" like World Bank), municipalities ("munis"), commercial paper, and repos collateralized by US Treasuries.</translate>
|-
| <translate><!--T:82--> Public Equities</translate> || <translate><!--T:72--> The Equities portfolio will consist mainly of investments in public equities. Designed to be the principal contributor toward achieving the growth target, the Equities portfolio is likely to be the most volatile asset class and may include areas like Emerging Markets.</translate>
|-
| <translate><!--T:83--> Alternatives</translate> || <translate><!--T:73--> The Alternatives portfolio will consist mainly of hybrid real estate investments, via publicly traded REITs. This allocation may be a source of heightened volatility, but such volatility may not exceed that of the Equities portfolio.</translate>
|-
| <translate><!--T:84--> ''Blended Benchmark - to be based on asset mix and investment objectives''</translate> || <translate><!--T:74-->
''35% Bloomberg 1-5-year Government Credit fixed income index.
''65% S&P 1500 equity index.''</translate>
|}
<translate>


=== Other Guidelines === <!--T:75-->
The Long-term Reserve Fund requires that all investment assets be invested in marketable securities, defined as securities that can be traded quickly and efficiently for the Long-term Reserve Fund, with minimal impact on market price. It is generally expected that the Treasurer will invest the assets in funds of accounts managed by third party investment firms, and will not be involved in the day-to-day buying and selling of individual securities.
</translate>
# <translate><!--T:76--> Prior approval by the Foundation's Treasurer is required before allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.</translate>
# <translate><!--T:77--> With the exception of U.S. Government and agency securities, fixed income issues of a single issuer and its affiliates (ownership stake of 20% or more)) shall at time of purchase constitute no more than 5% of the market value of the Long-term Reserve Fund portfolio.</translate>
# <translate><!--T:78--> Maturity (using preferred metric of expected maturity) of any individual holding shall not exceed eleven years. Weighted average duration of the portfolio shall be aligned with the Time Horizon of the Long-term Reserve Fund.</translate>
<translate>


== ESG Investments == <!--T:79-->
#Cash Equivalents
##Treasury bills.
##Registered money market funds.
##Commercial paper.
##Banker's acceptances.
##Repurchase agreements.
##Certificates of deposit and time deposits.
#Fixed Income Securities
##Domestic fixed and variable rate bonds, notes and bills issued by the U.S. Government or its agencies.
##Domestic fixed and variable rate bonds and notes issued by U.S. domiciled corporations, non-U.S. based corporations and governments and multinational organizations (e.g. World Bank, IADB, EDS).
##Instruments issued by foreign issuers may be denominated in U.S. dollars or foreign currencies.
##Mortgage-backed securities (MBS) issued by U.S. government agencies or government sponsored enterprises (i.e. GNMAs, FNMAs, FHLMCs) or by corporate issuers, collateralized mortgage obligations collateralized by otherwise eligible mortgage-backed securities ("CMOs"), interest only (10) and principal only (PO) securities are also eligible.
##Asset-backed securities ("ABS").
##Taxable or tax-exempt municipal bonds and other municipal fixed income issues.
##Cash equivalent instruments including registered money market mutual funds, U.S. Treasury bills, bank certificates of deposit, time deposits or similar depository funds and commercial paper.
##Repurchase agreements.
#Equity Securities
##Stocks issued by domestic corporations and/or foreign corporations are eligible for investment, including instruments enumerated below.
##Convertible notes and bonds.
##Preferred stocks.
##American Depository Receipts of non-US companies (ADR s).
##Global Depository Receipts of US and non-US companies (GDR).
#Real Estate Securities
##Real estate investment trusts - domestic and/or foreign.


<!--T:80-->
To ensure marketability and liquidity, equity investments shall be executed through nationally recognized exchanges such as the New York Stock Exchange, NYSE MKT, NASDAQ or similarly recognized foreign exchanges.
The Foundation shall first prioritize its risk/return requirements and operational obligations. ESG factors, in addition to many other factors, may have an impact on investment performance over the long term. The Foundation may consider ESG ratings when analyzing and selecting investments, and the Treasurer shall report annually to the Audit Committee on the overall ESG profile of the portfolio using publicly available ESG ratings, as appropriate.</translate>


'''{{resolution|string=Approved}} {{dateT|month=02|day=27|year=2024}}'''
''Maturity''

The fixed income securities shall have a weighted average maturity of two years or less with maturity up to four years on any single security.

====Reporting====
The Treasurer will provide a copy of the investment statement(s) to the Chair of the Audit Committee on a quarterly basis with reports available to the Board of Trustees upon request.

====Financial Performance Benchmark====
50% Fixed Income - Bloomberg Barclays 1-3 Year Government/Credit Index

50% Equity - S&P 1500 Index

===Procedures===
The following procedures will be followed to ensure the investment policy statement is consistent with the mission of the Wikimedia Foundation and accurately reflects current financial conditions:
#The Audit Committee shall review this investment policy periodically.
#The Audit Committee will recommend any changes in this policy to the Board of Trustees.
#The Wikimedia Foundation Board of Trustees must approve any changes to this policy.

The following procedures will be used to determine the dollar amounts to be placed in the each of the various funds:
#The Treasurer will manage the dollar amounts to be held in the Operating Fund, Short-term Reserve Fund and Long-Term Reserve Fund.

===Delegation of Authority===
The Board of a non-profit organization is ultimately responsible for its investments. The Audit Committee, acting as a sub-committee of the Board of Trustees of the Wikimedia Foundation, authorizes the Treasurer to execute investment transactions directly or via professional investment managers consistent with the "Delegations of Financial and Spending Authority" approved July 11, 2012 by the Board of Trustees which is incorporated into this Investment Policy by reference.

It is anticipated that the services of investment managers and/or advisors may be sought to manage portions of the funds. The Treasurer is authorized to hire, fire or replace investment managers and/or advisors with notification to the Chair of the Audit Committee.

===Restrictions===
In implementing this policy, the Treasurer or designated professional investment
advisors may not buy securities on margin, may not incur debts of any other kind, may not leverage and may not sell securities short. Alternative investments such as hedge funds, private equity funds and private real estate funds could involve the use of margin, debt, leverage and short sales, but would be eligible for investment only upon explicit approval of the Board of Trustees on a case-by-case basis.

===Duty of Care===
Assets shall be invested with care, skill, prudence, and diligence under the circumstances then prevailing that a prudent investor, acting in like capacity and familiar with such matters, would use in the investment of a like fund.


[[Category:Documentation wiki]]

Latest revision as of 20:34, 11 April 2024

Other languages:
  • English
Wikimedia policies
Wikimedia Foundation mark
Wikimedia projects
Foundation Board and staff
Other

Purpose

The purpose of the Wikimedia Foundation ("the Foundation") is to be the home of free-knowledge projects like Wikipedia. In order to serve this mission, the Foundation's investment portfolio is intended to provide both short-term and long-term financial support to the Foundation's current operations as well as its growth over time.

For the purposes of providing for sufficient liquidity, managing investment risk, and optimizing investment returns within acceptable risk parameters, the following funds shall be created and held as separate investment pools:

  1. Operating Fund
  2. Short-term Reserve Fund
  3. Long-term Reserve Fund

Roles and Responsibilities

Audit Committee

The Board of a non-profit organization is ultimately responsible for its investments. The Wikimedia Foundation Board of Trustees ("the Board") has delegated to the Audit Committee ("the Committee") the fiduciary responsibility to oversee the Foundation's investment activities.

  • The Committee shall monitor investment performance semi-annually.
  • The Committee shall review the Investment Policy Statement ("the Policy") periodically to ensure it is consistent with the mission of the Foundation and accurately reflects current financial conditions.
  • The Committee shall approve any changes in the Policy and notify the Board of those changes.

Treasurer

The Committee authorizes the Foundation's Treasurer to implement the Policy, including executing investment transactions directly or via professional investment managers consistent with the "Delegations of Financial and Spending Authority" approved July 11, 2012 by the Board of Trustees which is incorporated into this Policy by reference.

It is anticipated that the services of investment managers and/or advisors may be sought to manage portions of the funds. The Treasurer is authorized to hire, fire, or replace investment managers and/or advisors with notification to the Chair of the Audit Committee. The Treasurer must approve allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.

Performance Monitoring

The Treasurer shall monitor and evaluate investment performance quarterly. The Treasurer shall report investment performance and provide a copy of the investment statement(s) to the Committee on a semi-annual basis. The Treasurer shall report annually to the Committee on the overall Environmental, Social, & Governance ("ESG") profile of the portfolio using publicly available ESG ratings, as appropriate.

Spending Policy

The Foundation will use funds in the Operating Fund to meet the day-to-day financial obligations of the Foundation. The Foundation may withdraw funds from the Short-term Reserve Fund or the Long-term Reserve Fund, in line with approved spending in our annual plan and in line with maintaining the working capital ratio established by the Board of Trustees. The objectives of the spending policy are to grow the purchasing power of the funds and to achieve a predictable distribution of funds to aid budgeting.

Any material withdrawal of funds from the Short-Term Reserve Fund or the Long-term Reserve Fund outside of approved spending in the annual plan or the normal expectations of adequate working capital ratio must be communicated to the Board prior to withdrawal and material use of funds.

Operating Fund

Investment Objectives

The purpose of the Operating Fund is to provide sufficient cash to meet the day-to-day financial obligations of the Foundation in a timely manner. The Operating Fund shall prioritize preservation of capital and access to immediate liquidity in order to minimize risk to operational financial needs of the Foundation.

Investment Guidelines

Time Horizon Less than 3 months.
Return Objective Target short-term Treasury market rates.
Risk Tolerance The volatility of the Operating Fund should be similar to its benchmark.
Liquidity Needs The Operating Fund should maintain high liquidity (short to ultra-short/weekly to monthly range) in order to support the Foundation's day-to-day operations.
Spend The Operating Fund shall aim to reserve four-to-six months of expenses on a rolling quarterly basis. Due to the timing of cash flows, the Foundation may – at times – either lag or exceed this level of liquidity in its Operating Fund.

Asset Class Mix

Cash & Cash Equivalents This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.
Money Market Indexed Funds These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo" or "repos") exposure collateralized by US Treasuries is also permissible, where applicable.
Public Fixed Income This Fixed Income allocation shall be comprised of direct obligations of the US Government, its agencies, and instrumentalities. Repos collateralized by US Treasuries are also permissible.
Benchmark - to be based on asset mix and investment objectives Bloomberg US T-bill 1-3 Month fixed income index.

Short-term Reserve Fund

Investment Objectives

The purpose of the Short-term Reserve Fund is to improve the return on the funds held for expenditure beyond twelve months. The Short-term Reserve Fund shall prioritize preservation of capital and also aim to generate current income in line with its benchmark.

Investment Guidelines

Time Horizon 2.5 to 3.5 years.
Return Objective Target 2.5- to 3.5-year Treasury market rates and target total return (net of fees) in line with its benchmark.
Risk Tolerance The volatility of the Short-term Reserve Fund should be similar to its benchmark. This Fund is anticipated to be the least volatile segment of the consolidated Foundation portfolio.
Liquidity Needs The Short-term Reserve Fund should maintain intermediate-term liquidity, in line with the time horizon mandate.
Spend The current portion of the Short-term Reserve Fund may contribute to the Foundation's ongoing Operating Fund needs.

Asset Class Mix

Cash & Cash Equivalents This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.
Money Market Indexed Funds These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo") exposure collateralized by US Treasuries is also permissible, where applicable.
Public Fixed Income The Fixed Income portfolio will consist mainly of investments in investment-grade marketable bonds (USD-denominated). Permissible securities may be issued by US Treasury, domestic US organizations, non-US corporations, non-US governments ("sovereign" bonds), and multinational organizations ("supranationals" like World Bank), municipalities ("munis"), commercial paper, and repos collateralized by US Treasuries.
Benchmark - to be based on asset mix and investment objectives Bloomberg 1-3-year Government Credit fixed income index.

Other Guidelines

  1. Prior approval by the Foundation's Treasurer is required before allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.
  2. With the exception of U.S. Government and agency securities, fixed income issues of a single issuer and its affiliates (ownership stake of 20% or more) shall at time of purchase constitute no more than 5% of the market value of the Short-term Reserve Fund portfolio.
  3. Maturity (using preferred metric of expected maturity) of any individual holding shall not exceed six years. Weighted average duration of the portfolio shall be aligned with the Time Horizon of the Short-term Reserve Fund.

Long-term Reserve Fund

Investment Objectives

The purpose of the Long-term Reserve Fund is to aid growth of invested assets and maintain the portfolio's inflation-adjusted purchasing power over a long-term. The Long-term Reserve Fund shall prioritize long-term growth while avoiding excessive risk. This Fund shall also aim to achieve returns in excess of the rate of inflation plus spending over a long-term (greater than 7-10 years).

Investment Guidelines

Time Horizon Up to 4.5 years for fixed income while greater than 7 years for equities.
Return Objective Target total return (net of fees) in line with its blended benchmark.
Risk Tolerance The volatility of the Long-term Reserve Fund should be similar to its benchmark. This Fund is anticipated to be the most volatile segment of the consolidated Foundation portfolio.
Liquidity Needs The Long-term Reserve Fund shall be comprised of highly liquid assets while also aiming to minimize asset turnover (i.e. holding assets over a long term to promote investment growth and return).
Spend The current portion of the Long-term Reserve Fund may contribute to the Foundation's ongoing Operating Fund needs.

Asset Class Mix

Cash & Cash Equivalents This allocation may be held in US Treasuries, savings accounts, interest-bearing money market accounts, or certificates of deposit at FDIC-insured commercial banking institutions.
Money Market Indexed Funds These securities must be comprised of US Treasury-equivalent holdings. Underlying repurchase agreement ("repo") exposure collateralized by US Treasuries is also permissible, where applicable.
Public Fixed Income The Fixed Income portfolio will consist mainly of investments in investment-grade marketable bonds (USD-denominated). Permissible securities may be issued by US Treasury, domestic US organizations, non-US corporations, non-US governments ("sovereign" bonds), and multinational organizations ("supranationals" like World Bank), municipalities ("munis"), commercial paper, and repos collateralized by US Treasuries.
Public Equities The Equities portfolio will consist mainly of investments in public equities. Designed to be the principal contributor toward achieving the growth target, the Equities portfolio is likely to be the most volatile asset class and may include areas like Emerging Markets.
Alternatives The Alternatives portfolio will consist mainly of hybrid real estate investments, via publicly traded REITs. This allocation may be a source of heightened volatility, but such volatility may not exceed that of the Equities portfolio.
Blended Benchmark - to be based on asset mix and investment objectives 35% Bloomberg 1-5-year Government Credit fixed income index.

65% S&P 1500 equity index.

Other Guidelines

  1. Prior approval by the Foundation's Treasurer is required before allocation to securitized assets like mortgage-backed, commercial loan obligations, asset-backed securities, etc.
  2. With the exception of U.S. Government and agency securities, fixed income issues of a single issuer and its affiliates (ownership stake of 20% or more)) shall at time of purchase constitute no more than 5% of the market value of the Long-term Reserve Fund portfolio.
  3. Maturity (using preferred metric of expected maturity) of any individual holding shall not exceed eleven years. Weighted average duration of the portfolio shall be aligned with the Time Horizon of the Long-term Reserve Fund.

ESG Investments

The Foundation shall first prioritize its risk/return requirements and operational obligations. ESG factors, in addition to many other factors, may have an impact on investment performance over the long term. The Foundation may consider ESG ratings when analyzing and selecting investments, and the Treasurer shall report annually to the Audit Committee on the overall ESG profile of the portfolio using publicly available ESG ratings, as appropriate.

Approve: February 27, 2024

Retrieved from "https://foundation.wikimedia.org/w/index.php?title=Policy:Wikimedia_Foundation_Investment_Policy&oldid=383444"