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Form 990-PF
The IRS Mandates Private Foundations to File Form 990 Electronically!
Under the “Taxpayer First Act of 2019,” the IRS mandates all private foundations to file their Form 990-PF electronically for the tax year beginning on or after July 2, 2019.
What is Form 990-PF?
Form 990-PF is used by private foundations to report revenue, expenses, organization activities, names of trustees and officers, application information, and a complete grants list to the IRS.
Form 990-PF serves as a substitute for section 4947(a)(1) nonexempt charitable trust's income tax return, Form 1041 when the trust has no taxable income.
Who must file Form 990-PF?
Form 990-PF must be filed by the following foundations.
Exempt private foundations (section 6033(a), (b), and (c)).
Taxable private foundations (section 6033(d)).
Organizations that agree to private foundation status whose exempt status applications are still pending on the 990-PF deadline.
Organizations that claim private foundation status and haven't applied for exempt status yet, but their application isn't untimely under section 508(a) for Retroactive recognition of exemption.
Who must file Form 990-PF?
Form 990-PF must be filed by the following foundations.
Organizations that made an election under section 41(e)(6)(D)(iv).
Private foundations that are making a section 507(b) termination.
Section 4947(a)(1) nonexempt charitable trusts treated as private foundations (section 6033(d)).
When is the due date to file Form 990-PF?
The due date to file Form 990-PF will differ based on the organization’s accounting period.
Organizations that follow the calendar tax year must file Form 990-PF by May 15.
If the filing organization follows the fiscal tax year, the 990-PF return is due by the 15th day of the 5th month after the organization’s accounting period ends.
If the due date falls on a Saturday, Sunday, or any legal holiday, file the form on the next business day.
Mandated Electronic Filing Requirements
The IRS has mandated the electronic filing of Form 990-PF for private foundations.
For tax years beginning on or after July 2, 2019, under the Taxpayer First Act, section 3101 of P. L. 116-25, the IRS mandates that private foundations file Form 990-PF electronically.
Form 990-PF Extension
Private foundations that need more time to file Form 990-PF can file Form 8868, the Application for Automatic Extension of Time To File an Exempt Organization Return.
Form 8868 gives your organization an extension of up to 6 months to file the return.
Tax990 also supports the filing of tax extension Form 8868.
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Understanding Form 990-PF: The Essential Guide for Private Foundations
Form 990-PF, the "Return of Private Foundation," is a crucial annual filing required by the IRS for private foundations. This form serves as a comprehensive report of a foundation’s financial activities, including assets, liabilities, grants, expenses, and compliance with various IRS regulations. Properly completing and filing Form 990-PF is essential for maintaining a foundation’s tax-exempt status and ensuring transparency to the IRS and the public.
What Is Form 990-PF?
Form 990-PF is a detailed tax return that private foundations must submit to the IRS every year. Unlike other nonprofit organizations that may file Form 990 or 990-EZ, private foundations must use this specific form, as it includes sections that address the unique financial and operational structures of private foundations. The form helps the IRS ensure that foundations are fulfilling their charitable mission and complying with relevant tax laws, including grant distribution requirements and investment income reporting.
Key Components of Form 990-PF
Form 990-PF is divided into several parts, each focusing on different aspects of the foundation’s financial and operational activities:
Part I – Financial Summary: This section provides an overview of the foundation’s financial activities, including revenue, expenses, assets, and liabilities. It covers everything from investment income to administrative expenses, giving the IRS and the public a snapshot of the foundation’s financial health.
Part II – Balance Sheet: The balance sheet section requires detailed information about the foundation’s assets and liabilities at the beginning and end of the fiscal year. This section helps demonstrate the foundation’s financial position and the amount of resources it has available for charitable purposes.
Part III – Analysis of Revenue and Expenses: Here, foundations break down their sources of revenue, including contributions, grants, and investment income. They must also categorize expenses such as grants, administrative costs, and any unrelated business income.
Part IV – Capital Gains and Losses: This section focuses on any gains or losses from the sale of securities or other investments, which are important for calculating the foundation’s excise tax on investment income.
Part V – Minimum Distribution Requirements: Private foundations are required to distribute at least 5% of their net investment assets annually for charitable purposes. This section helps the IRS ensure that the foundation is meeting its distribution obligations.
Part VI – Compliance Questions: This part asks specific questions regarding potential conflicts of interest, self-dealing, political contributions, and other regulatory concerns that private foundations must navigate.
Why Form 990-PF Matters
Filing Form 990-PF is critical for maintaining a private foundation’s tax-exempt status. The form allows the IRS to monitor whether the foundation is complying with tax laws, including the excise tax on investment income and the minimum distribution requirements. Additionally, the form serves as a transparency tool, allowing the public, donors, and grant recipients to see how the foundation uses its resources.
Failure to file Form 990-PF on time or accurately can result in significant penalties. Foundations that do not file by the deadline—typically the 15th day of the 5th month after the end of the foundation’s fiscal year—can face daily fines, which can accumulate quickly. Repeated failure to comply can lead to more severe consequences, including the loss of tax-exempt status. If you want to fill Form 990-PF, you can explore https://cpakpa.com/.
Conclusion
Form 990-PF is an essential reporting requirement for private foundations. It ensures compliance with IRS regulations, promotes transparency, and helps the foundation maintain its tax-exempt status. By carefully preparing and filing Form 990-PF each year, private foundations can avoid penalties and continue their philanthropic work with confidence.
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Filing Form 990: Return of Organization Exempt from Income Tax
What is Form 990?
IRS form 990 is Return of Organization Exempt from Income Tax. We can think of it as a tax return since it’s similar to corporate taxes, but it’s known as information tax. By filing Form 990, the government comes to know about the company’s mission, the activities that they deal in, their finances, achievements from the last year and mainly the reason for maintaining their tax-exempt status.
Who files it?
There are numerous tax forms in the US and not everyone has to file every form. Depending on their status and entity selection, they file different forms. Below are the categories who have to file Form 990:
Tax-exempt organizations
Non-exempt charitable trusts
Section 527 political organizations
Different types of Form 990 for Non- profits
There are 4 different types of Form 990 for different purposes based on the gross receipts and total assets. These are:-
Form 990: The organization must fill form 990 when their gross receipts exceed the total of $200,000 and their assets are equal to or greater than $500,000. This should be filled on an annual basis. There are some essential details that should be submitted along with the form are the company’s mission and history, the financial records and all activities. All non-profit organizations are eligible to fill this, but there are more subcategories for less gross revenue and total assets.
Form 990 EZ: This form is the shortest version of form 990. All non-profits who have a gross revenue more than $50,000 but less than $200,000 and total assets less than $500,000 in the past year are eligible to fill Form 990 EZ. When submitting this form, there are some additional requirements like balance sheet, grants (if received before) and their accomplishments. All non-profits that are eligible for Form 990 EZ can fill Form 990 if they want but must submit only one.
Form 990 N: This form is for the smallest non-profits when their gross revenue is $50,000 or less and it’s an 8 question form. All the organizations that fall under this category can fill Form 990 or Form 990 EZ. Organizations only prefer to fill one of these forms when they want to create detailed public records for recognition and increase donor accountability.
Form 990 PF: This form should be filled by all private foundations regardless of their gross revenue and total assets. Here they report all their financial activities, trustees, grants and private assets. Those filling this form are not entitled to fill any other 990 forms.
Deadline of the form
The deadline of Form 990 is the 15th day of the 5th month from the day the accounting period ends. Those who operate as per the fiscal year, their deadline for the form will be 15th May. There is an option where you can request for an extension for a period of 6 months. To request this extension, you can fill Form 8868. If approved, then the deadline would move to 15th November.
Consequences of not submitting the form
If your organization is filing Form 990, it’s important that you file it on time. If they don’t file as per deadline, you might run into penalties and fees. There are two types of penalties:
If the organization’s gross receipts is less than $1,000,000 for the financial year, then they might pay a penalty of $20 per day. The maximum penalty that can be charged is $10,000 or 5% of the year’s gross receipts, whichever is lower.
If the organization’s gross receipts is more than $1,000,000 for the financial year, then they might pay a penalty of $100 per day. The maximum penalty that can be charged is $50,000 or 5% of the year’s gross receipts, whichever is lower.
If you fail in filing Form 990 for consecutive 3 years, then you will automatically forfeit your tax-exempt status from the day of the deadline of the third year. With this, the IRS will revoke your status and let you know by sending you a letter.
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An Introduction to the Form 990PF
Within the Form 990-PF there is information that Metasoft Online Education is of the utmost importance to the serious prospect researcher. However you need to know where to find this information and how to interpret it. To help you do this, we have provided a list of the ten most significant pieces of information that can be found in the Form 990-PF and show you precisely where you can find the information.
What is the IRS Form 990-PF?
As a preliminary to discussing the ten most significant facts that can be found in the Form 990-PF, we will first provide some background information on the Form itself.
While much can be found out by examining an organization's Form 990-PF for one year, a great deal more can be learned Metasoft Webinars from looking at its Form 990-PF for two or more years. For example, if an organization reports the receipt of a considerable amount of income for three years from a particular source, such as program service revenue, it may be considered likely that the organization will continue to receive funds from this source in the future. This conclusion could not be made with as much confidence on the basis of one Form 990-PF.
Read more:-
Metasoft Online Education
online fundraising
Metasoft Webinars
Corporate fundraising
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Kevin CPA Help You Prepare IRS form 990 Glendale
Kevin CPA Help You Prepare IRS form 990 Glendale
A well-prepared Form 990 can be used to raise funds. It is critical to get it right!
For the past years, our experienced account managers have helped charities like yours file Form 990s on a daily basis. We understand Form 990! To eliminate inaccuracies, our Form 990 Preparation expert’s triple-check each form for errors. After all, your form 990 is the public face of your company. We make certain that you present your best self. You can rely on us to complete your IRS Form 990 accurately and on time. We are able to file Forms 990, 990-EZ, 990-PF, 990-T, and 990-N. Contact us today for a free quote.
IRS Form 990 is the tax form that tax-exempt nonprofit organizations file with the IRS each year. The 990 allows the IRS and the general public to assess nonprofits and their operations.
Concerning Form 990
IRS Form 990 is the yearly information (tax) return required by all 501(c) charities. Every year, our Compliance Team assists over 1,000 organizations with the crucial duty of completing and filing their annual Form 990 requirement.
IRS form 990 Glendale or 990-EZ is not often a decent do-it-yourself job. For many filers, it is far more complicated than submitting a corporation tax return. The major reason for IRS audits of NGOs is errors and omissions on Form 990. Aside from the apparent focus on financial activity, the IRS also examines compliance, governance, structure, processes, and activities.
Preparing an accurate and thorough Form 990 sometimes feel like repeating the 501(c)(3) decision procedure! Another incentive to delegate responsibility to our pros.
Important IRS Form 990 Preparation Tips
The IRS Form 990 filing deadline is the 15th of the fifth month after the conclusion of your fiscal year. For calendar-year organizations, the Form 990 is due on May 15 of the following year. To discover impending Form 990/990-EZ filing deadlines, click here.
The IRS may impose penalties on organizations that fail to file or file after the deadline (including extensions). Penalties may have a negative impact on your organization's reputation and, eventually, donations.
Form 990 Prepared Correctly By Kevin CPA!
Our IRS-certified Enrolled Agents and tax specialists are Form 990 experts, preparing over 1,000 client returns each year. We accomplish it in three easy steps:
· You complete the organizer
We give you our tax organizer so you know exactly what information you need to collect for us. No more speculating! And, if you have any questions, our staff is available to assist you at every step of the way.
· We Prepare the Return
Your tax professional will go through your organizer with you and write a thorough and correct Form 990 for you. If we require clarification on anything, we will contact you.
We E-File With the IRS
We'll e-file your Form 990 with the IRS and inform you when it's been approved after your return is complete and you've had an opportunity to approve it. Nothing could be simpler!
Kevin E. Fordyce, CPA. Our firm is primarily focused on the attest, tax, and advisory needs for the not-for-profit sector including charitable organizations, foundations and charitable trusts, however we also provide those same services to individuals and small businesses as well. We believe in the value of relationships and view every client as a partnership and truly believe that our success is a result of your success. We have a dedicated team of professionals that are committed to providing close, personal attention to all of our clients.
Our firm is led by Kevin E. Fordyce, a certified public accountant with over 25 years in public accounting working with both Big 4 and local firms. We have a very talented staff of CPAs and other professionals, most of whom have also previously provided audit and tax services at large firms, but now work with us to provide our clients top level service in a firm dedicated to personalized service.
Please feel free to contact us with any questions or comments you may have, we would love to hear from you. We have offices in California and Texas, however we have the ability to serve clients anywhere.
Kevin E. Fordyce, CPA
1327 North Pacific Ave 3588 Starling Drive
Glendale, CA 91202 & Frisco, TX 75034
(818) 543-1400 (469) 980-7400
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IRS Form 990-PF is used by an Private Organization to calculate their tax. To knpow more click on link now.
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The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
By Marc Gunther.
Eighteen months ago, the people who manage the endowment at the John D. and Catherine T. MacArthur Foundation got some bad news: Investments they had made in funds managed by EnerVest, a Houston-based private equity firm that operates more than 33,000 oil and gas wells across the US, had plummeted in value to almost nothing.
The losses were small, relatively speaking — roughly $15 million, a fraction of the foundation’s $7 billion endowment — but they were unwelcome, if only because they called attention to the fact that MacArthur, whose mission is, famously, to build a “more just, verdant and peaceful world,” had taken a financial hit by investing in fossil fuels.
Lesson learned? No.
Despite its stature as a major funder of climate-change solutions, MacArthur continues to finance the fossil-fuel industry, a review of its most recent federal tax return shows. It does so deliberately–that is, by seeking out opportunities to invest in oil and gas, unlike investors who are inadvertently exposed to fossil-fuel companies because they own broad-based index funds that capture the entire stock market.
The MacArthur endowment holds investments valued at well over $200m in at least a dozen private equity firms,* including Enervest, that finance the exploration, production and distribution of fossil fuels, according to MacArthur’s 2017 Form 990-PF. (The full scope of its fossil fuel holdings can’t be determined because many private equity and hedge funds do not disclose what they own.) Some of MacArthur’s funds are invested in western Canada’s oil sands, which have been called the largest–and most destructive–industrial project in human history. The Chicago-based foundation also invests in mining companies, including those that mine coal in the western US and in South Africa; in Dynegy, a coal-burning utility; and in an energy-related hedge fund, the Cayman Islands-based ZP Offshore Energy Fund.
“SACRED COWS”
The fossil fuel investments persist even as grant-makers at MacArthur sound alarms about climate change. Just last month, Jorgen Thomsen, director of climate solutions at MacArthur, wrote:
Humanity is in dark, uncharted territory…it is time to invest in bringing together leaders of the fossil fuel, energy, insurance, finance, credit ratings, and transportation industries with climate scientists, geoengineering specialists, and environmental advocates for no-holds-barred discussions about what strides and sacrifices must be made by 2030 to avert planetary catastrophe. All parties—including ourselves—must set aside “sacred cows” to come to terms with what is possible…
His blogpost was headlined It’s Time to Break with Convention.
This month, The Chronicle of Philanthropy published a package of cover stories, which I wrote, about foundations and impact investing. The cover story reports that very few of the US’s very biggest foundations have been willing to align their endowments with their grant-making.
In that regard, MacArthur is typical: The Hewlett, Packard, Bloomberg and Moore foundations, all of them major funders of environmental groups that work to curb climate change, also invest in the fossil fuel industry. Like most foundations, they remain unmoved by the GoFossil Free campaign launched by activist Bill McKibben, 350.org, the Sierra Club and Greenpeace in 2012 or by Divest-Invest: Philanthropy, a coalition of foundations that calls on other grant-makers to replace their investments in fossil fuels with investments in climate solutions.
Ellen Dorsey, a leader of Divest-Invest and the executive director of the Wallace Global Fund, is dismayed that major funders have declined to divest fossil fuels and reinvest in clean energy. By email, she told me:
Foundations should not be investing their endowments in industries driving the crises that they are asking their grantees to solve. Foundations are not just ‘any’ investor. They are driven by their mission. They receive charitable tax status to serve the public good. If their investments are harming the public good, they have mission level responsibility to act. If those same investments are financially poor, they are failing in their fiduciary duty, as well. If you are invested in fossil fuels, you own climate change.
She added:
Investing in fossil fuels is not only morally bankrupt, it’s financially bankrupt. The traditional energy sector has been one of the worst performers of the S&P500 for five years running, and in 2018 it was dead last. The shift is structural and one-way. Investors are on notice that the days when fossil fuels delivered strong, stable returns is over.
Dorsey is right that energy stocks have been terrible investments lately, badly lagging the broader markets. Whether that trend will continue is, of course, unknowable. So long us all of us continue to use fossil fuels, energy companies will profit by selling them.
MACARTHUR’S RESPONSE
When I asked Andrew Solomon, managing director for communications at MacArthur, for comment, he replied:
We maintain a small allocation in our investment portfolio to a variety of private energy managers using different strategies, including those that invest in oil, gas, and wind. We believe this allocation is a prudent part of an overall diversified investment portfolio. Diversification helps to ensure that our portfolio returns can adequately support our grantmaking across different potential economic and market environments. Specifically, our allocation to private energy can help protect our overall portfolio against the risk of higher inflation.
We always invest with care and consider carefully a manager’s approach to environmental safety, as well as other factors.
Our investment allocation to private energy is independent of our significant commitment – more than $236 million since 2015– to address climate change through our Climate Solutions strategy and through clean energy impact investments.
Again, it’s important to note that MacArthur is typical of US foundations. Most manage their endowments the old-fashioned way — that is, to make money any way they can, without much regard for the consequences. MacArthur is is one of the few to have carved out a slice of its endowment — albeit just $19 million — for impact investments that align with its missions.
But, of course, all investments have impact — for better or worse.
By investing in fossil fuels, MacArthur supports the industry that has done more than any other to oppose the climate solutions put forth by the environmental groups that it funds. Its grantees include the Sierra Club, the Environmental Defense Fund, the Nature Conservancy, the Natural Resources Defense Council and the Carbon Disclosure Project.
MacArthur also made the first major grant to The World Resources Institute, a respected, non-partisan, business-friendly, science-based think tank in Washington, D.C. MacArthur has given more than $52m to WRI over the years. And what does WRI say about what it calls sustainable investing?
This:
Institutional investors, banks, and other private sector financial institutions oversee trillions of dollars of investable capital. How they choose to deploy these resources will have a large impact on which companies, technologies, and projects succeed and flourish. In a world where the dynamic challenges of climate change, population growth, resource scarcity, and inequality are testing the earth’s limits and our standards for human well-being, it is crucial that these financial actors allocate their capital in a way that accounts for environmental and social risks and supports sustainable solutions.
WRI has spent five years very prudently working to align its own $40m endowment with its vision for a sustainable future. To inspire others to follow, and provide practical guidance, WRI published an excellent report called Learning by Doing: Lessons from from WRI’s Sustainable Investing Journey. One can only hope that WRI sent copies to all its funders, including MacArthur.
To be sure, managing the $7bn MacArthur endowment is more complex than managing the $40m WRI endowment. In a 2017 blogpost, WRI notes that “there are still not enough high-quality investment products to meet demand to fulfill a fully diversified, global, multi asset-class portfolio—the type most institutional asset owners demand.”
But, whatever obstacles remain, it seems past time for the big climate funders like MacArthur to at least begin the process of aligning their endowment with their missions and values, and to explain why they are doing so. They need not go all the way to divestment, but must they invest in some of the dirtiest fossil fuel projects on the planet? The question answers itself.
As for the argument that sustainable investing will damage returns, the evidence increasingly points the other way. In a 2016 blogpost, WRI says: “When evaluated across multiple funds and time periods, sustainable investing exhibits a largely neutral – and oftentimes positive – impact on financial performance.” Some of the world’s most successful investors, including Warren Buffett and David Swensen, say that institutions, including foundations, are making a mistake when they try to beat the markets with actively-managed investments. (See my 2017 blogpost, Warren Buffett has some excellent advice for foundations that they probably won’t take.)
PAY FOR PERFORMANCE?
MacArthur’s financial performance, it turns out, is decidedly average. Foundation Financial Research, a startup company that compiled the first comprehensive database of foundation endowment returns, estimates that the MacArthur endowment generated annualized returns of 8.4 percent for the five-year period ending in December 2017. That places the foundation in the 40th-60th percentile of all foundations. MacArthur did slightly better than the average for all foundations during that period and slightly better than a peer group of larger foundations that pursued a similar investment approach, according to Foundation Financial Research. Different time periods would, of course, produce different results.
Lately, MacArthur has performed well. “Our 2017 returns, posted to our website, were 16.7 percent, which puts us in the 94th percentile for that year compared to a broad universe of foundations maintained by Cambridge Associates,” McArthur’s Andrew Solomon wrote.**
True enough, but the Wallace Global Fund did better. Ellen Dorsey tells me: “Our foundation had returns of 21.6% in 2017, 100% divested, over 16% in climate solutions, and with an additional carve out for mission investments where we accept lower than market returns. We did so well that we put our year end earnings right back in to grants for 2018–doubling our grant budget for action on climate and democracy.”
One final point: MacArthur’s investment costs are not trivial. Private equity and hedge fund managers charge steep fees. Its investment managers are well paid, too.
On its IRS returns, MacArthur reports that Susan Manske, the foundation’s chief investment officer, was paid total compensation, including performance bonuses, of $1.9m in 2017, $1.9m in 2016 and $1.6m in 2015–more than MacArthur’s president, Julia Stasch. Four managing directors in the investment office were paid between $900k and $1m, including performance bonuses. The compensation figures includes unvested incentive compensation, which may not be paid because it is subject to a substantial risk of forfeiture based on future returns, according to MacArthur.
To sum up: MacArthur pays its asset managers generously for generating average returns while investing in ways that make a planetary catastrophe more likely.
Note to self, MacArthur: It’s time to break with convention.
—
*Here is my incomplete list of private equity funds owned by MacArthur, with descriptions drawn from their websites:
ARC Energy Fund (Canadian oil and gas)
Blue Water Energy Fund (oil and gas)
Camcor Energy Fund (western Canada oil and gas)
Encap Energy Capital funds (equity capital for US oil and gas)
ENR Partners (upstream, oilfield service, energy, power, oil and gas sectors)
Kerogen Energy Fund (international oil and gas)
Natural Gas Partners
NGP Natural Resources (oil and gas)
Quantum Energy Partners (North American oil and gas upstream, midstream, oil field service, and power generation sectors)
Resource Capital Fund (mining, including coal)
The Energy and Minerals Group Fund (oil and gas, possibly coal)
While much remains hidden — hedge funds based in the Cayman Islands make limited disclosure, to say the least — MacArthur is more transparent than most foundations about its portfolio. Try to figure out what Bloomberg owns–you can’t.
**The Cambridge benchmark is neither broad-based nor transparent. Foundation trustees who rely on benchmarks provided by the executives who are being benchmarked aren’t doing their job.
Marc Gunther is a veteran journalist, speaker, and writer who reported on business and sustainability for many years. Since 2015, he has been writing about foundations, nonprofits and global development on his blog, Nonprofit Chronicles.
The post The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels appeared first on Alternative Energy Stocks.
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Form 990-PF: Essential Information for Private Foundations
Form 990-PF is an annual document that private foundations are required to file with the Internal Revenue Service (IRS).
This form details the foundation's financial operations, promoting transparency and accountability.
Here’s an overview of its key components and significance:
What is Form 990-PF, and Who must File it?
Form 990-PF is the annual informational return filed with the IRS by private foundations. Unlike public charities, private foundations are typically funded by a single source, such as an individual, family, or corporation.
This form is specific to private foundations, offering a comprehensive look into their financial activities, governance, and charitable distributions.
When is the due date to file 990-PF?
The due date to file 990-PF is the 15th day of the 5th month after the respective tax year ends.
If the organization follows the calendar tax year, then the deadline is May 15th.
Key Components of Form 990-PF
1. Basic Information :
Name, address, and contact information of the foundation.
Employer Identification Number (EIN).
Fiscal year covered by the report.
2. Financial Data :
Balance sheets, including assets, liabilities, and net assets.
Revenue details, such as contributions, grants, investment income, and other sources of income.
Expense details, including grants and similar amounts paid, compensation of officers and staff, administrative costs, and other operational expenses.
3. Grants and Contributions :
Detailed listing of grants and contributions made by the foundation during the year.
Information about the recipients of these grants, including names, addresses, and the purpose of the grants.
4. Investments and Assets :
Information about the foundation’s investments, including stocks, bonds, real estate, and other assets.
Details on income generated from these investments.
5. Compliance and Governance :
Statements regarding compliance with IRS regulations and requirements.
Information on the foundation’s officers, directors, trustees, and key employees.
Disclosure of any potential conflicts of interest and related party transactions.
What are the steps to file Form 990-PF?
Find the simple and secure filing steps to file Form 990-PF:
Search your organization’s details
Choose the tax year and Form
Enter the required information in Form 990-PF
Review the Form 990-PF
Transmit it to the IRS.
Why Choose Tax990 to file your Form 990PF?
Tax990 is an IRS authorized efiling software, that makes your 990-PF filing experience easy, secure, and accurate with the boundless features it offers.
Supports filing for the current and 2 prior tax years
Includes Form 990 PF Schedule B for free, when required
Ensures accuracy through a built-in error check system
Provides seamless customer support via live chat, phone, and email.
Conclusion
Form 990-PF plays a crucial role in maintaining the integrity and transparency of private foundations. By providing detailed financial information, it helps ensure that these organizations operate in a manner consistent with their charitable purposes and legal obligations. For anyone involved with or interested in private foundations, understanding the requirements and significance of 990-PF is essential.
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The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
By Marc Gunther.
Eighteen months ago, the people who manage the endowment at the John D. and Catherine T. MacArthur Foundation got some bad news: Investments they had made in funds managed by EnerVest, a Houston-based private equity firm that operates more than 33,000 oil and gas wells across the US, had plummeted in value to almost nothing.
The losses were small, relatively speaking — roughly $15 million, a fraction of the foundation’s $7 billion endowment — but they were unwelcome, if only because they called attention to the fact that MacArthur, whose mission is, famously, to build a “more just, verdant and peaceful world,” had taken a financial hit by investing in fossil fuels.
Lesson learned? No.
Despite its stature as a major funder of climate-change solutions, MacArthur continues to finance the fossil-fuel industry, a review of its most recent federal tax return shows. It does so deliberately–that is, by seeking out opportunities to invest in oil and gas, unlike investors who are inadvertently exposed to fossil-fuel companies because they own broad-based index funds that capture the entire stock market.
The MacArthur endowment holds investments valued at well over $200m in at least a dozen private equity firms,* including Enervest, that finance the exploration, production and distribution of fossil fuels, according to MacArthur’s 2017 Form 990-PF. (The full scope of its fossil fuel holdings can’t be determined because many private equity and hedge funds do not disclose what they own.) Some of MacArthur’s funds are invested in western Canada’s oil sands, which have been called the largest–and most destructive–industrial project in human history. The Chicago-based foundation also invests in mining companies, including those that mine coal in the western US and in South Africa; in Dynegy, a coal-burning utility; and in an energy-related hedge fund, the Cayman Islands-based ZP Offshore Energy Fund.
“SACRED COWS”
The fossil fuel investments persist even as grant-makers at MacArthur sound alarms about climate change. Just last month, Jorgen Thomsen, director of climate solutions at MacArthur, wrote:
Humanity is in dark, uncharted territory…it is time to invest in bringing together leaders of the fossil fuel, energy, insurance, finance, credit ratings, and transportation industries with climate scientists, geoengineering specialists, and environmental advocates for no-holds-barred discussions about what strides and sacrifices must be made by 2030 to avert planetary catastrophe. All parties—including ourselves—must set aside “sacred cows” to come to terms with what is possible…
His blogpost was headlined It’s Time to Break with Convention.
This month, The Chronicle of Philanthropy published a package of cover stories, which I wrote, about foundations and impact investing. The cover story reports that very few of the US’s very biggest foundations have been willing to align their endowments with their grant-making.
In that regard, MacArthur is typical: The Hewlett, Packard, Bloomberg and Moore foundations, all of them major funders of environmental groups that work to curb climate change, also invest in the fossil fuel industry. Like most foundations, they remain unmoved by the GoFossil Free campaign launched by activist Bill McKibben, 350.org, the Sierra Club and Greenpeace in 2012 or by Divest-Invest: Philanthropy, a coalition of foundations that calls on other grant-makers to replace their investments in fossil fuels with investments in climate solutions.
Ellen Dorsey, a leader of Divest-Invest and the executive director of the Wallace Global Fund, is dismayed that major funders have declined to divest fossil fuels and reinvest in clean energy. By email, she told me:
Foundations should not be investing their endowments in industries driving the crises that they are asking their grantees to solve. Foundations are not just ‘any’ investor. They are driven by their mission. They receive charitable tax status to serve the public good. If their investments are harming the public good, they have mission level responsibility to act. If those same investments are financially poor, they are failing in their fiduciary duty, as well. If you are invested in fossil fuels, you own climate change.
She added:
Investing in fossil fuels is not only morally bankrupt, it’s financially bankrupt. The traditional energy sector has been one of the worst performers of the S&P500 for five years running, and in 2018 it was dead last. The shift is structural and one-way. Investors are on notice that the days when fossil fuels delivered strong, stable returns is over.
Dorsey is right that energy stocks have been terrible investments lately, badly lagging the broader markets. Whether that trend will continue is, of course, unknowable. So long us all of us continue to use fossil fuels, energy companies will profit by selling them.
MACARTHUR’S RESPONSE
When I asked Andrew Solomon, managing director for communications at MacArthur, for comment, he replied:
We maintain a small allocation in our investment portfolio to a variety of private energy managers using different strategies, including those that invest in oil, gas, and wind. We believe this allocation is a prudent part of an overall diversified investment portfolio. Diversification helps to ensure that our portfolio returns can adequately support our grantmaking across different potential economic and market environments. Specifically, our allocation to private energy can help protect our overall portfolio against the risk of higher inflation.
We always invest with care and consider carefully a manager’s approach to environmental safety, as well as other factors.
Our investment allocation to private energy is independent of our significant commitment – more than $236 million since 2015– to address climate change through our Climate Solutions strategy and through clean energy impact investments.
Again, it’s important to note that MacArthur is typical of US foundations. Most manage their endowments the old-fashioned way — that is, to make money any way they can, without much regard for the consequences. MacArthur is is one of the few to have carved out a slice of its endowment — albeit just $19 million — for impact investments that align with its missions.
But, of course, all investments have impact — for better or worse.
By investing in fossil fuels, MacArthur supports the industry that has done more than any other to oppose the climate solutions put forth by the environmental groups that it funds. Its grantees include the Sierra Club, the Environmental Defense Fund, the Nature Conservancy, the Natural Resources Defense Council and the Carbon Disclosure Project.
MacArthur also made the first major grant to The World Resources Institute, a respected, non-partisan, business-friendly, science-based think tank in Washington, D.C. MacArthur has given more than $52m to WRI over the years. And what does WRI say about what it calls sustainable investing?
This:
Institutional investors, banks, and other private sector financial institutions oversee trillions of dollars of investable capital. How they choose to deploy these resources will have a large impact on which companies, technologies, and projects succeed and flourish. In a world where the dynamic challenges of climate change, population growth, resource scarcity, and inequality are testing the earth’s limits and our standards for human well-being, it is crucial that these financial actors allocate their capital in a way that accounts for environmental and social risks and supports sustainable solutions.
WRI has spent five years very prudently working to align its own $40m endowment with its vision for a sustainable future. To inspire others to follow, and provide practical guidance, WRI published an excellent report called Learning by Doing: Lessons from from WRI’s Sustainable Investing Journey. One can only hope that WRI sent copies to all its funders, including MacArthur.
To be sure, managing the $7bn MacArthur endowment is more complex than managing the $40m WRI endowment. In a 2017 blogpost, WRI notes that “there are still not enough high-quality investment products to meet demand to fulfill a fully diversified, global, multi asset-class portfolio—the type most institutional asset owners demand.”
But, whatever obstacles remain, it seems past time for the big climate funders like MacArthur to at least begin the process of aligning their endowment with their missions and values, and to explain why they are doing so. They need not go all the way to divestment, but must they invest in some of the dirtiest fossil fuel projects on the planet? The question answers itself.
As for the argument that sustainable investing will damage returns, the evidence increasingly points the other way. In a 2016 blogpost, WRI says: “When evaluated across multiple funds and time periods, sustainable investing exhibits a largely neutral – and oftentimes positive – impact on financial performance.” Some of the world’s most successful investors, including Warren Buffett and David Swensen, say that institutions, including foundations, are making a mistake when they try to beat the markets with actively-managed investments. (See my 2017 blogpost, Warren Buffett has some excellent advice for foundations that they probably won’t take.)
PAY FOR PERFORMANCE?
MacArthur’s financial performance, it turns out, is decidedly average. Foundation Financial Research, a startup company that compiled the first comprehensive database of foundation endowment returns, estimates that the MacArthur endowment generated annualized returns of 8.4 percent for the five-year period ending in December 2017. That places the foundation in the 40th-60th percentile of all foundations. MacArthur did slightly better than the average for all foundations during that period and slightly better than a peer group of larger foundations that pursued a similar investment approach, according to Foundation Financial Research. Different time periods would, of course, produce different results.
Lately, MacArthur has performed well. “Our 2017 returns, posted to our website, were 16.7 percent, which puts us in the 94th percentile for that year compared to a broad universe of foundations maintained by Cambridge Associates,” McArthur’s Andrew Solomon wrote.**
True enough, but the Wallace Global Fund did better. Ellen Dorsey tells me: “Our foundation had returns of 21.6% in 2017, 100% divested, over 16% in climate solutions, and with an additional carve out for mission investments where we accept lower than market returns. We did so well that we put our year end earnings right back in to grants for 2018–doubling our grant budget for action on climate and democracy.”
One final point: MacArthur’s investment costs are not trivial. Private equity and hedge fund managers charge steep fees. Its investment managers are well paid, too.
On its IRS returns, MacArthur reports that Susan Manske, the foundation’s chief investment officer, was paid total compensation, including performance bonuses, of $1.9m in 2017, $1.9m in 2016 and $1.6m in 2015–more than MacArthur’s president, Julia Stasch. Four managing directors in the investment office were paid between $900k and $1m, including performance bonuses. The compensation figures includes unvested incentive compensation, which may not be paid because it is subject to a substantial risk of forfeiture based on future returns, according to MacArthur.
To sum up: MacArthur pays its asset managers generously for generating average returns while investing in ways that make a planetary catastrophe more likely.
Note to self, MacArthur: It’s time to break with convention.
—
*Here is my incomplete list of private equity funds owned by MacArthur, with descriptions drawn from their websites:
ARC Energy Fund (Canadian oil and gas)
Blue Water Energy Fund (oil and gas)
Camcor Energy Fund (western Canada oil and gas)
Encap Energy Capital funds (equity capital for US oil and gas)
ENR Partners (upstream, oilfield service, energy, power, oil and gas sectors)
Kerogen Energy Fund (international oil and gas)
Natural Gas Partners
NGP Natural Resources (oil and gas)
Quantum Energy Partners (North American oil and gas upstream, midstream, oil field service, and power generation sectors)
Resource Capital Fund (mining, including coal)
The Energy and Minerals Group Fund (oil and gas, possibly coal)
While much remains hidden — hedge funds based in the Cayman Islands make limited disclosure, to say the least — MacArthur is more transparent than most foundations about its portfolio. Try to figure out what Bloomberg owns–you can’t.
**The Cambridge benchmark is neither broad-based nor transparent. Foundation trustees who rely on benchmarks provided by the executives who are being benchmarked aren’t doing their job.
Marc Gunther is a veteran journalist, speaker, and writer who reported on business and sustainability for many years. Since 2015, he has been writing about foundations, nonprofits and global development on his blog, Nonprofit Chronicles.
The post The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels appeared first on Alternative Energy Stocks.
http://bit.ly/2RkXRCz
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Text
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
By Marc Gunther.
Eighteen months ago, the people who manage the endowment at the John D. and Catherine T. MacArthur Foundation got some bad news: Investments they had made in funds managed by EnerVest, a Houston-based private equity firm that operates more than 33,000 oil and gas wells across the US, had plummeted in value to almost nothing.
The losses were small, relatively speaking — roughly $15 million, a fraction of the foundation’s $7 billion endowment — but they were unwelcome, if only because they called attention to the fact that MacArthur, whose mission is, famously, to build a “more just, verdant and peaceful world,” had taken a financial hit by investing in fossil fuels.
Lesson learned? No.
Despite its stature as a major funder of climate-change solutions, MacArthur continues to finance the fossil-fuel industry, a review of its most recent federal tax return shows. It does so deliberately–that is, by seeking out opportunities to invest in oil and gas, unlike investors who are inadvertently exposed to fossil-fuel companies because they own broad-based index funds that capture the entire stock market.
The MacArthur endowment holds investments valued at well over $200m in at least a dozen private equity firms,* including Enervest, that finance the exploration, production and distribution of fossil fuels, according to MacArthur’s 2017 Form 990-PF. (The full scope of its fossil fuel holdings can’t be determined because many private equity and hedge funds do not disclose what they own.) Some of MacArthur’s funds are invested in western Canada’s oil sands, which have been called the largest–and most destructive–industrial project in human history. The Chicago-based foundation also invests in mining companies, including those that mine coal in the western US and in South Africa; in Dynegy, a coal-burning utility; and in an energy-related hedge fund, the Cayman Islands-based ZP Offshore Energy Fund.
“SACRED COWS”
The fossil fuel investments persist even as grant-makers at MacArthur sound alarms about climate change. Just last month, Jorgen Thomsen, director of climate solutions at MacArthur, wrote:
Humanity is in dark, uncharted territory…it is time to invest in bringing together leaders of the fossil fuel, energy, insurance, finance, credit ratings, and transportation industries with climate scientists, geoengineering specialists, and environmental advocates for no-holds-barred discussions about what strides and sacrifices must be made by 2030 to avert planetary catastrophe. All parties—including ourselves—must set aside “sacred cows” to come to terms with what is possible…
His blogpost was headlined It’s Time to Break with Convention.
This month, The Chronicle of Philanthropy published a package of cover stories, which I wrote, about foundations and impact investing. The cover story reports that very few of the US’s very biggest foundations have been willing to align their endowments with their grant-making.
In that regard, MacArthur is typical: The Hewlett, Packard, Bloomberg and Moore foundations, all of them major funders of environmental groups that work to curb climate change, also invest in the fossil fuel industry. Like most foundations, they remain unmoved by the GoFossil Free campaign launched by activist Bill McKibben, 350.org, the Sierra Club and Greenpeace in 2012 or by Divest-Invest: Philanthropy, a coalition of foundations that calls on other grant-makers to replace their investments in fossil fuels with investments in climate solutions.
Ellen Dorsey, a leader of Divest-Invest and the executive director of the Wallace Global Fund, is dismayed that major funders have declined to divest fossil fuels and reinvest in clean energy. By email, she told me:
Foundations should not be investing their endowments in industries driving the crises that they are asking their grantees to solve. Foundations are not just ‘any’ investor. They are driven by their mission. They receive charitable tax status to serve the public good. If their investments are harming the public good, they have mission level responsibility to act. If those same investments are financially poor, they are failing in their fiduciary duty, as well. If you are invested in fossil fuels, you own climate change.
She added:
Investing in fossil fuels is not only morally bankrupt, it’s financially bankrupt. The traditional energy sector has been one of the worst performers of the S&P500 for five years running, and in 2018 it was dead last. The shift is structural and one-way. Investors are on notice that the days when fossil fuels delivered strong, stable returns is over.
Dorsey is right that energy stocks have been terrible investments lately, badly lagging the broader markets. Whether that trend will continue is, of course, unknowable. So long us all of us continue to use fossil fuels, energy companies will profit by selling them.
MACARTHUR’S RESPONSE
When I asked Andrew Solomon, managing director for communications at MacArthur, for comment, he replied:
We maintain a small allocation in our investment portfolio to a variety of private energy managers using different strategies, including those that invest in oil, gas, and wind. We believe this allocation is a prudent part of an overall diversified investment portfolio. Diversification helps to ensure that our portfolio returns can adequately support our grantmaking across different potential economic and market environments. Specifically, our allocation to private energy can help protect our overall portfolio against the risk of higher inflation.
We always invest with care and consider carefully a manager’s approach to environmental safety, as well as other factors.
Our investment allocation to private energy is independent of our significant commitment – more than $236 million since 2015– to address climate change through our Climate Solutions strategy and through clean energy impact investments.
Again, it’s important to note that MacArthur is typical of US foundations. Most manage their endowments the old-fashioned way — that is, to make money any way they can, without much regard for the consequences. MacArthur is is one of the few to have carved out a slice of its endowment — albeit just $19 million — for impact investments that align with its missions.
But, of course, all investments have impact — for better or worse.
By investing in fossil fuels, MacArthur supports the industry that has done more than any other to oppose the climate solutions put forth by the environmental groups that it funds. Its grantees include the Sierra Club, the Environmental Defense Fund, the Nature Conservancy, the Natural Resources Defense Council and the Carbon Disclosure Project.
MacArthur also made the first major grant to The World Resources Institute, a respected, non-partisan, business-friendly, science-based think tank in Washington, D.C. MacArthur has given more than $52m to WRI over the years. And what does WRI say about what it calls sustainable investing?
This:
Institutional investors, banks, and other private sector financial institutions oversee trillions of dollars of investable capital. How they choose to deploy these resources will have a large impact on which companies, technologies, and projects succeed and flourish. In a world where the dynamic challenges of climate change, population growth, resource scarcity, and inequality are testing the earth’s limits and our standards for human well-being, it is crucial that these financial actors allocate their capital in a way that accounts for environmental and social risks and supports sustainable solutions.
WRI has spent five years very prudently working to align its own $40m endowment with its vision for a sustainable future. To inspire others to follow, and provide practical guidance, WRI published an excellent report called Learning by Doing: Lessons from from WRI’s Sustainable Investing Journey. One can only hope that WRI sent copies to all its funders, including MacArthur.
To be sure, managing the $7bn MacArthur endowment is more complex than managing the $40m WRI endowment. In a 2017 blogpost, WRI notes that “there are still not enough high-quality investment products to meet demand to fulfill a fully diversified, global, multi asset-class portfolio—the type most institutional asset owners demand.”
But, whatever obstacles remain, it seems past time for the big climate funders like MacArthur to at least begin the process of aligning their endowment with their missions and values, and to explain why they are doing so. They need not go all the way to divestment, but must they invest in some of the dirtiest fossil fuel projects on the planet? The question answers itself.
As for the argument that sustainable investing will damage returns, the evidence increasingly points the other way. In a 2016 blogpost, WRI says: “When evaluated across multiple funds and time periods, sustainable investing exhibits a largely neutral – and oftentimes positive – impact on financial performance.” Some of the world’s most successful investors, including Warren Buffett and David Swensen, say that institutions, including foundations, are making a mistake when they try to beat the markets with actively-managed investments. (See my 2017 blogpost, Warren Buffett has some excellent advice for foundations that they probably won’t take.)
PAY FOR PERFORMANCE?
MacArthur’s financial performance, it turns out, is decidedly average. Foundation Financial Research, a startup company that compiled the first comprehensive database of foundation endowment returns, estimates that the MacArthur endowment generated annualized returns of 8.4 percent for the five-year period ending in December 2017. That places the foundation in the 40th-60th percentile of all foundations. MacArthur did slightly better than the average for all foundations during that period and slightly better than a peer group of larger foundations that pursued a similar investment approach, according to Foundation Financial Research. Different time periods would, of course, produce different results.
Lately, MacArthur has performed well. “Our 2017 returns, posted to our website, were 16.7 percent, which puts us in the 94th percentile for that year compared to a broad universe of foundations maintained by Cambridge Associates,” McArthur’s Andrew Solomon wrote.**
True enough, but the Wallace Global Fund did better. Ellen Dorsey tells me: “Our foundation had returns of 21.6% in 2017, 100% divested, over 16% in climate solutions, and with an additional carve out for mission investments where we accept lower than market returns. We did so well that we put our year end earnings right back in to grants for 2018–doubling our grant budget for action on climate and democracy.”
One final point: MacArthur’s investment costs are not trivial. Private equity and hedge fund managers charge steep fees. Its investment managers are well paid, too.
On its IRS returns, MacArthur reports that Susan Manske, the foundation’s chief investment officer, was paid total compensation, including performance bonuses, of $1.9m in 2017, $1.9m in 2016 and $1.6m in 2015–more than MacArthur’s president, Julia Stasch. Four managing directors in the investment office were paid between $900k and $1m, including performance bonuses. The compensation figures includes unvested incentive compensation, which may not be paid because it is subject to a substantial risk of forfeiture based on future returns, according to MacArthur.
To sum up: MacArthur pays its asset managers generously for generating average returns while investing in ways that make a planetary catastrophe more likely.
Note to self, MacArthur: It’s time to break with convention.
—
*Here is my incomplete list of private equity funds owned by MacArthur, with descriptions drawn from their websites:
ARC Energy Fund (Canadian oil and gas)
Blue Water Energy Fund (oil and gas)
Camcor Energy Fund (western Canada oil and gas)
Encap Energy Capital funds (equity capital for US oil and gas)
ENR Partners (upstream, oilfield service, energy, power, oil and gas sectors)
Kerogen Energy Fund (international oil and gas)
Natural Gas Partners
NGP Natural Resources (oil and gas)
Quantum Energy Partners (North American oil and gas upstream, midstream, oil field service, and power generation sectors)
Resource Capital Fund (mining, including coal)
The Energy and Minerals Group Fund (oil and gas, possibly coal)
While much remains hidden — hedge funds based in the Cayman Islands make limited disclosure, to say the least — MacArthur is more transparent than most foundations about its portfolio. Try to figure out what Bloomberg owns–you can’t.
**The Cambridge benchmark is neither broad-based nor transparent. Foundation trustees who rely on benchmarks provided by the executives who are being benchmarked aren’t doing their job.
Marc Gunther is a veteran journalist, speaker, and writer who reported on business and sustainability for many years. Since 2015, he has been writing about foundations, nonprofits and global development on his blog, Nonprofit Chronicles.
The post The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels appeared first on Alternative Energy Stocks.
http://bit.ly/2RkXRCz
0 notes
Text
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
By Marc Gunther.
Eighteen months ago, the people who manage the endowment at the John D. and Catherine T. MacArthur Foundation got some bad news: Investments they had made in funds managed by EnerVest, a Houston-based private equity firm that operates more than 33,000 oil and gas wells across the US, had plummeted in value to almost nothing.
The losses were small, relatively speaking — roughly $15 million, a fraction of the foundation’s $7 billion endowment — but they were unwelcome, if only because they called attention to the fact that MacArthur, whose mission is, famously, to build a “more just, verdant and peaceful world,” had taken a financial hit by investing in fossil fuels.
Lesson learned? No.
Despite its stature as a major funder of climate-change solutions, MacArthur continues to finance the fossil-fuel industry, a review of its most recent federal tax return shows. It does so deliberately–that is, by seeking out opportunities to invest in oil and gas, unlike investors who are inadvertently exposed to fossil-fuel companies because they own broad-based index funds that capture the entire stock market.
The MacArthur endowment holds investments valued at well over $200m in at least a dozen private equity firms,* including Enervest, that finance the exploration, production and distribution of fossil fuels, according to MacArthur’s 2017 Form 990-PF. (The full scope of its fossil fuel holdings can’t be determined because many private equity and hedge funds do not disclose what they own.) Some of MacArthur’s funds are invested in western Canada’s oil sands, which have been called the largest–and most destructive–industrial project in human history. The Chicago-based foundation also invests in mining companies, including those that mine coal in the western US and in South Africa; in Dynegy, a coal-burning utility; and in an energy-related hedge fund, the Cayman Islands-based ZP Offshore Energy Fund.
“SACRED COWS”
The fossil fuel investments persist even as grant-makers at MacArthur sound alarms about climate change. Just last month, Jorgen Thomsen, director of climate solutions at MacArthur, wrote:
Humanity is in dark, uncharted territory…it is time to invest in bringing together leaders of the fossil fuel, energy, insurance, finance, credit ratings, and transportation industries with climate scientists, geoengineering specialists, and environmental advocates for no-holds-barred discussions about what strides and sacrifices must be made by 2030 to avert planetary catastrophe. All parties—including ourselves—must set aside “sacred cows” to come to terms with what is possible…
His blogpost was headlined It’s Time to Break with Convention.
This month, The Chronicle of Philanthropy published a package of cover stories, which I wrote, about foundations and impact investing. The cover story reports that very few of the US’s very biggest foundations have been willing to align their endowments with their grant-making.
In that regard, MacArthur is typical: The Hewlett, Packard, Bloomberg and Moore foundations, all of them major funders of environmental groups that work to curb climate change, also invest in the fossil fuel industry. Like most foundations, they remain unmoved by the GoFossil Free campaign launched by activist Bill McKibben, 350.org, the Sierra Club and Greenpeace in 2012 or by Divest-Invest: Philanthropy, a coalition of foundations that calls on other grant-makers to replace their investments in fossil fuels with investments in climate solutions.
Ellen Dorsey, a leader of Divest-Invest and the executive director of the Wallace Global Fund, is dismayed that major funders have declined to divest fossil fuels and reinvest in clean energy. By email, she told me:
Foundations should not be investing their endowments in industries driving the crises that they are asking their grantees to solve. Foundations are not just ‘any’ investor. They are driven by their mission. They receive charitable tax status to serve the public good. If their investments are harming the public good, they have mission level responsibility to act. If those same investments are financially poor, they are failing in their fiduciary duty, as well. If you are invested in fossil fuels, you own climate change.
She added:
Investing in fossil fuels is not only morally bankrupt, it’s financially bankrupt. The traditional energy sector has been one of the worst performers of the S&P500 for five years running, and in 2018 it was dead last. The shift is structural and one-way. Investors are on notice that the days when fossil fuels delivered strong, stable returns is over.
Dorsey is right that energy stocks have been terrible investments lately, badly lagging the broader markets. Whether that trend will continue is, of course, unknowable. So long us all of us continue to use fossil fuels, energy companies will profit by selling them.
MACARTHUR’S RESPONSE
When I asked Andrew Solomon, managing director for communications at MacArthur, for comment, he replied:
We maintain a small allocation in our investment portfolio to a variety of private energy managers using different strategies, including those that invest in oil, gas, and wind. We believe this allocation is a prudent part of an overall diversified investment portfolio. Diversification helps to ensure that our portfolio returns can adequately support our grantmaking across different potential economic and market environments. Specifically, our allocation to private energy can help protect our overall portfolio against the risk of higher inflation.
We always invest with care and consider carefully a manager’s approach to environmental safety, as well as other factors.
Our investment allocation to private energy is independent of our significant commitment – more than $236 million since 2015– to address climate change through our Climate Solutions strategy and through clean energy impact investments.
Again, it’s important to note that MacArthur is typical of US foundations. Most manage their endowments the old-fashioned way — that is, to make money any way they can, without much regard for the consequences. MacArthur is is one of the few to have carved out a slice of its endowment — albeit just $19 million — for impact investments that align with its missions.
But, of course, all investments have impact — for better or worse.
By investing in fossil fuels, MacArthur supports the industry that has done more than any other to oppose the climate solutions put forth by the environmental groups that it funds. Its grantees include the Sierra Club, the Environmental Defense Fund, the Nature Conservancy, the Natural Resources Defense Council and the Carbon Disclosure Project.
MacArthur also made the first major grant to The World Resources Institute, a respected, non-partisan, business-friendly, science-based think tank in Washington, D.C. MacArthur has given more than $52m to WRI over the years. And what does WRI say about what it calls sustainable investing?
This:
Institutional investors, banks, and other private sector financial institutions oversee trillions of dollars of investable capital. How they choose to deploy these resources will have a large impact on which companies, technologies, and projects succeed and flourish. In a world where the dynamic challenges of climate change, population growth, resource scarcity, and inequality are testing the earth’s limits and our standards for human well-being, it is crucial that these financial actors allocate their capital in a way that accounts for environmental and social risks and supports sustainable solutions.
WRI has spent five years very prudently working to align its own $40m endowment with its vision for a sustainable future. To inspire others to follow, and provide practical guidance, WRI published an excellent report called Learning by Doing: Lessons from from WRI’s Sustainable Investing Journey. One can only hope that WRI sent copies to all its funders, including MacArthur.
To be sure, managing the $7bn MacArthur endowment is more complex than managing the $40m WRI endowment. In a 2017 blogpost, WRI notes that “there are still not enough high-quality investment products to meet demand to fulfill a fully diversified, global, multi asset-class portfolio—the type most institutional asset owners demand.”
But, whatever obstacles remain, it seems past time for the big climate funders like MacArthur to at least begin the process of aligning their endowment with their missions and values, and to explain why they are doing so. They need not go all the way to divestment, but must they invest in some of the dirtiest fossil fuel projects on the planet? The question answers itself.
As for the argument that sustainable investing will damage returns, the evidence increasingly points the other way. In a 2016 blogpost, WRI says: “When evaluated across multiple funds and time periods, sustainable investing exhibits a largely neutral – and oftentimes positive – impact on financial performance.” Some of the world’s most successful investors, including Warren Buffett and David Swensen, say that institutions, including foundations, are making a mistake when they try to beat the markets with actively-managed investments. (See my 2017 blogpost, Warren Buffett has some excellent advice for foundations that they probably won’t take.)
PAY FOR PERFORMANCE?
MacArthur’s financial performance, it turns out, is decidedly average. Foundation Financial Research, a startup company that compiled the first comprehensive database of foundation endowment returns, estimates that the MacArthur endowment generated annualized returns of 8.4 percent for the five-year period ending in December 2017. That places the foundation in the 40th-60th percentile of all foundations. MacArthur did slightly better than the average for all foundations during that period and slightly better than a peer group of larger foundations that pursued a similar investment approach, according to Foundation Financial Research. Different time periods would, of course, produce different results.
Lately, MacArthur has performed well. “Our 2017 returns, posted to our website, were 16.7 percent, which puts us in the 94th percentile for that year compared to a broad universe of foundations maintained by Cambridge Associates,” McArthur’s Andrew Solomon wrote.**
True enough, but the Wallace Global Fund did better. Ellen Dorsey tells me: “Our foundation had returns of 21.6% in 2017, 100% divested, over 16% in climate solutions, and with an additional carve out for mission investments where we accept lower than market returns. We did so well that we put our year end earnings right back in to grants for 2018–doubling our grant budget for action on climate and democracy.”
One final point: MacArthur’s investment costs are not trivial. Private equity and hedge fund managers charge steep fees. Its investment managers are well paid, too.
On its IRS returns, MacArthur reports that Susan Manske, the foundation’s chief investment officer, was paid total compensation, including performance bonuses, of $1.9m in 2017, $1.9m in 2016 and $1.6m in 2015–more than MacArthur’s president, Julia Stasch. Four managing directors in the investment office were paid between $900k and $1m, including performance bonuses. The compensation figures includes unvested incentive compensation, which may not be paid because it is subject to a substantial risk of forfeiture based on future returns, according to MacArthur.
To sum up: MacArthur pays its asset managers generously for generating average returns while investing in ways that make a planetary catastrophe more likely.
Note to self, MacArthur: It’s time to break with convention.
—
*Here is my incomplete list of private equity funds owned by MacArthur, with descriptions drawn from their websites:
ARC Energy Fund (Canadian oil and gas)
Blue Water Energy Fund (oil and gas)
Camcor Energy Fund (western Canada oil and gas)
Encap Energy Capital funds (equity capital for US oil and gas)
ENR Partners (upstream, oilfield service, energy, power, oil and gas sectors)
Kerogen Energy Fund (international oil and gas)
Natural Gas Partners
NGP Natural Resources (oil and gas)
Quantum Energy Partners (North American oil and gas upstream, midstream, oil field service, and power generation sectors)
Resource Capital Fund (mining, including coal)
The Energy and Minerals Group Fund (oil and gas, possibly coal)
While much remains hidden — hedge funds based in the Cayman Islands make limited disclosure, to say the least — MacArthur is more transparent than most foundations about its portfolio. Try to figure out what Bloomberg owns–you can’t.
**The Cambridge benchmark is neither broad-based nor transparent. Foundation trustees who rely on benchmarks provided by the executives who are being benchmarked aren’t doing their job.
Marc Gunther is a veteran journalist, speaker, and writer who reported on business and sustainability for many years. Since 2015, he has been writing about foundations, nonprofits and global development on his blog, Nonprofit Chronicles.
The post The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels appeared first on Alternative Energy Stocks.
http://bit.ly/2RkXRCz
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Kevin CPA Will Prepare Form 990 Dallas
Kevin CPA Will Prepare Form 990 Dallas
What exactly is Form 990?
Tax-exempt nonprofit organizations must submit Form 990 with the Internal Revenue Service every year. Essentially, the form serves as a year-end report for your company. The amount of information you must include is determined by the state you submit (more on that later).
In general, the information on form 990 Dallas covers the objective of your charity, the activities you manage, and the financials of your organization. You might also provide information on your organization's accomplishments in the previous year. While Form 990 isn't technically a tax return, it is the IRS's means of ensuring that your charity follows the regulations for tax-exempt organizations and determines if your organization is still eligible for tax-exempt status.
Now that you know what a Form 990 is and what its purpose is, we'll go through the several sorts of 990s and how to figure out which one your organization will need to file.
Which 990 Form Should I Use?
The IRS has four separate 990 forms for nonprofit entities to utilize. One necessary for a company is determined by several variables, including gross receipts and total assets.
These parameters fluctuate significantly between small and large firms because larger organizations bring in more money and have more assets. Larger nonprofit organizations will have more documentation to fill out for their 990 since they have more receipts and purchases, whereas smaller nonprofit organizations would file a shorter form.
The following are the several versions of the 990 form, as well as the criteria for each:
· Form 990-N (e-Postcard):
This form is for smaller businesses with gross receipts of less than $50,000 per year.
This is the most straightforward 990 form to complete. You'll need to give some basic information, such as your company's legal name and address, EIN, tax year, principal officer's name and address, URL, and proof of tax revenues under $50,000.
If your organization qualifies for Form 990-N, you have the option of filing a complete return if you want to include extra information.
· Form 990-EZ:
This form is for small/medium businesses with gross receipts of less than $200,000 and total assets of less than $500,000.
This four-page form requests more information than Form 990-N, including balance sheet data, program successes, itemized grant information, etc.
· Form 990:
Even if you are qualified for Form 990-EZ, you can still complete the standard 990 forms.
The standard 990 form is for more prominent nonprofit organizations with a gross income of $200,000 or total assets of $500,000.
The typical 990 form is 12 pages lengthy and asks for the most information about your company. This form requires you to outline your objective and purpose, give financial details, and retell your organization's successes for the year.
· Form 990-PF:
Regardless of their financial situation, all private foundations are obliged to file this form.
This 990 form requires you to report on your foundation's private assets and its trustees and officials, grants, and financial operations.
The IRS provides instructions and guidance for each form to assist you with the filing process.
If you want to conduct an audit of your organization, you should do so before filing Form 990, as you will need to submit the results of your audit in your 990.
Although almost all nonprofit organizations are obliged to submit a 990 form, there are a few exceptions, including:
· Churches and other faith-based groups are examples of this. Missions, religious schools, and missionary organizations are examples of this.
· Universities and other state-run institutions
· Corporations owned by the government
Which 990 should you file?
Once you know what 990 form your company needs to file, you must determine when it should be filed. Unlike regular taxes, which are due on April 15th each year, nonprofit 990 forms have a specific due date.
Nonprofit organizations must submit their yearly 990 forms by the 5th month and 15th day following their fiscal year. Your 990 Form is due by May 15th if your organization runs on a calendar fiscal year that ends on December 31st.
If you need additional time to finish your 990, the IRS also grants extensions. Form 8868 must be filed to get an extension. You'll get a 6-month extension if you fill out this form.
Contact Kevin CPA to prepare form 990 Dallas!
Kevin E. Fordyce, CPA. Our firm is primarily focused on the attest, tax, and advisory needs for the not-for-profit sector including charitable organizations, foundations and charitable trusts, however we also provide those same services to individuals and small businesses as well. We believe in the value of relationships and view every client as a partnership and truly believe that our success is a result of your success. We have a dedicated team of professionals that are committed to providing close, personal attention to all of our clients.
Our firm is led by Kevin E. Fordyce, a certified public accountant with over 25 years in public accounting working with both Big 4 and local firms. We have a very talented staff of CPAs and other professionals, most of whom have also previously provided audit and tax services at large firms, but now work with us to provide our clients top level service in a firm dedicated to personalized service.
Please feel free to contact us with any questions or comments you may have, we would love to hear from you. We have offices in California and Texas, however we have the ability to serve clients anywhere.
Kevin E. Fordyce, CPA
1327 North Pacific Ave 3588 Starling Drive
Glendale, CA 91202 & Frisco, TX 75034
(818) 543-1400 (469) 980-7400
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The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
By Marc Gunther.
Eighteen months ago, the people who manage the endowment at the John D. and Catherine T. MacArthur Foundation got some bad news: Investments they had made in funds managed by EnerVest, a Houston-based private equity firm that operates more than 33,000 oil and gas wells across the US, had plummeted in value to almost nothing.
The losses were small, relatively speaking — roughly $15 million, a fraction of the foundation’s $7 billion endowment — but they were unwelcome, if only because they called attention to the fact that MacArthur, whose mission is, famously, to build a “more just, verdant and peaceful world,” had taken a financial hit by investing in fossil fuels.
Lesson learned? No.
Despite its stature as a major funder of climate-change solutions, MacArthur continues to finance the fossil-fuel industry, a review of its most recent federal tax return shows. It does so deliberately–that is, by seeking out opportunities to invest in oil and gas, unlike investors who are inadvertently exposed to fossil-fuel companies because they own broad-based index funds that capture the entire stock market.
The MacArthur endowment holds investments valued at well over $200m in at least a dozen private equity firms,* including Enervest, that finance the exploration, production and distribution of fossil fuels, according to MacArthur’s 2017 Form 990-PF. (The full scope of its fossil fuel holdings can’t be determined because many private equity and hedge funds do not disclose what they own.) Some of MacArthur’s funds are invested in western Canada’s oil sands, which have been called the largest–and most destructive–industrial project in human history. The Chicago-based foundation also invests in mining companies, including those that mine coal in the western US and in South Africa; in Dynegy, a coal-burning utility; and in an energy-related hedge fund, the Cayman Islands-based ZP Offshore Energy Fund.
“SACRED COWS”
The fossil fuel investments persist even as grant-makers at MacArthur sound alarms about climate change. Just last month, Jorgen Thomsen, director of climate solutions at MacArthur, wrote:
Humanity is in dark, uncharted territory…it is time to invest in bringing together leaders of the fossil fuel, energy, insurance, finance, credit ratings, and transportation industries with climate scientists, geoengineering specialists, and environmental advocates for no-holds-barred discussions about what strides and sacrifices must be made by 2030 to avert planetary catastrophe. All parties—including ourselves—must set aside “sacred cows” to come to terms with what is possible…
His blogpost was headlined It’s Time to Break with Convention.
This month, The Chronicle of Philanthropy published a package of cover stories, which I wrote, about foundations and impact investing. The cover story reports that very few of the US’s very biggest foundations have been willing to align their endowments with their grant-making.
In that regard, MacArthur is typical: The Hewlett, Packard, Bloomberg and Moore foundations, all of them major funders of environmental groups that work to curb climate change, also invest in the fossil fuel industry. Like most foundations, they remain unmoved by the GoFossil Free campaign launched by activist Bill McKibben, 350.org, the Sierra Club and Greenpeace in 2012 or by Divest-Invest: Philanthropy, a coalition of foundations that calls on other grant-makers to replace their investments in fossil fuels with investments in climate solutions.
Ellen Dorsey, a leader of Divest-Invest and the executive director of the Wallace Global Fund, is dismayed that major funders have declined to divest fossil fuels and reinvest in clean energy. By email, she told me:
Foundations should not be investing their endowments in industries driving the crises that they are asking their grantees to solve. Foundations are not just ‘any’ investor. They are driven by their mission. They receive charitable tax status to serve the public good. If their investments are harming the public good, they have mission level responsibility to act. If those same investments are financially poor, they are failing in their fiduciary duty, as well. If you are invested in fossil fuels, you own climate change.
She added:
Investing in fossil fuels is not only morally bankrupt, it’s financially bankrupt. The traditional energy sector has been one of the worst performers of the S&P500 for five years running, and in 2018 it was dead last. The shift is structural and one-way. Investors are on notice that the days when fossil fuels delivered strong, stable returns is over.
Dorsey is right that energy stocks have been terrible investments lately, badly lagging the broader markets. Whether that trend will continue is, of course, unknowable. So long us all of us continue to use fossil fuels, energy companies will profit by selling them.
MACARTHUR’S RESPONSE
When I asked Andrew Solomon, managing director for communications at MacArthur, for comment, he replied:
We maintain a small allocation in our investment portfolio to a variety of private energy managers using different strategies, including those that invest in oil, gas, and wind. We believe this allocation is a prudent part of an overall diversified investment portfolio. Diversification helps to ensure that our portfolio returns can adequately support our grantmaking across different potential economic and market environments. Specifically, our allocation to private energy can help protect our overall portfolio against the risk of higher inflation.
We always invest with care and consider carefully a manager’s approach to environmental safety, as well as other factors.
Our investment allocation to private energy is independent of our significant commitment – more than $236 million since 2015– to address climate change through our Climate Solutions strategy and through clean energy impact investments.
Again, it’s important to note that MacArthur is typical of US foundations. Most manage their endowments the old-fashioned way — that is, to make money any way they can, without much regard for the consequences. MacArthur is is one of the few to have carved out a slice of its endowment — albeit just $19 million — for impact investments that align with its missions.
But, of course, all investments have impact — for better or worse.
By investing in fossil fuels, MacArthur supports the industry that has done more than any other to oppose the climate solutions put forth by the environmental groups that it funds. Its grantees include the Sierra Club, the Environmental Defense Fund, the Nature Conservancy, the Natural Resources Defense Council and the Carbon Disclosure Project.
MacArthur also made the first major grant to The World Resources Institute, a respected, non-partisan, business-friendly, science-based think tank in Washington, D.C. MacArthur has given more than $52m to WRI over the years. And what does WRI say about what it calls sustainable investing?
This:
Institutional investors, banks, and other private sector financial institutions oversee trillions of dollars of investable capital. How they choose to deploy these resources will have a large impact on which companies, technologies, and projects succeed and flourish. In a world where the dynamic challenges of climate change, population growth, resource scarcity, and inequality are testing the earth’s limits and our standards for human well-being, it is crucial that these financial actors allocate their capital in a way that accounts for environmental and social risks and supports sustainable solutions.
WRI has spent five years very prudently working to align its own $40m endowment with its vision for a sustainable future. To inspire others to follow, and provide practical guidance, WRI published an excellent report called Learning by Doing: Lessons from from WRI’s Sustainable Investing Journey. One can only hope that WRI sent copies to all its funders, including MacArthur.
To be sure, managing the $7bn MacArthur endowment is more complex than managing the $40m WRI endowment. In a 2017 blogpost, WRI notes that “there are still not enough high-quality investment products to meet demand to fulfill a fully diversified, global, multi asset-class portfolio—the type most institutional asset owners demand.”
But, whatever obstacles remain, it seems past time for the big climate funders like MacArthur to at least begin the process of aligning their endowment with their missions and values, and to explain why they are doing so. They need not go all the way to divestment, but must they invest in some of the dirtiest fossil fuel projects on the planet? The question answers itself.
As for the argument that sustainable investing will damage returns, the evidence increasingly points the other way. In a 2016 blogpost, WRI says: “When evaluated across multiple funds and time periods, sustainable investing exhibits a largely neutral – and oftentimes positive – impact on financial performance.” Some of the world’s most successful investors, including Warren Buffett and David Swensen, say that institutions, including foundations, are making a mistake when they try to beat the markets with actively-managed investments. (See my 2017 blogpost, Warren Buffett has some excellent advice for foundations that they probably won’t take.)
PAY FOR PERFORMANCE?
MacArthur’s financial performance, it turns out, is decidedly average. Foundation Financial Research, a startup company that compiled the first comprehensive database of foundation endowment returns, estimates that the MacArthur endowment generated annualized returns of 8.4 percent for the five-year period ending in December 2017. That places the foundation in the 40th-60th percentile of all foundations. MacArthur did slightly better than the average for all foundations during that period and slightly better than a peer group of larger foundations that pursued a similar investment approach, according to Foundation Financial Research. Different time periods would, of course, produce different results.
Lately, MacArthur has performed well. “Our 2017 returns, posted to our website, were 16.7 percent, which puts us in the 94th percentile for that year compared to a broad universe of foundations maintained by Cambridge Associates,” McArthur’s Andrew Solomon wrote.**
True enough, but the Wallace Global Fund did better. Ellen Dorsey tells me: “Our foundation had returns of 21.6% in 2017, 100% divested, over 16% in climate solutions, and with an additional carve out for mission investments where we accept lower than market returns. We did so well that we put our year end earnings right back in to grants for 2018–doubling our grant budget for action on climate and democracy.”
One final point: MacArthur’s investment costs are not trivial. Private equity and hedge fund managers charge steep fees. Its investment managers are well paid, too.
On its IRS returns, MacArthur reports that Susan Manske, the foundation’s chief investment officer, was paid total compensation, including performance bonuses, of $1.9m in 2017, $1.9m in 2016 and $1.6m in 2015–more than MacArthur’s president, Julia Stasch. Four managing directors in the investment office were paid between $900k and $1m, including performance bonuses. The compensation figures includes unvested incentive compensation, which may not be paid because it is subject to a substantial risk of forfeiture based on future returns, according to MacArthur.
To sum up: MacArthur pays its asset managers generously for generating average returns while investing in ways that make a planetary catastrophe more likely.
Note to self, MacArthur: It’s time to break with convention.
—
*Here is my incomplete list of private equity funds owned by MacArthur, with descriptions drawn from their websites:
ARC Energy Fund (Canadian oil and gas)
Blue Water Energy Fund (oil and gas)
Camcor Energy Fund (western Canada oil and gas)
Encap Energy Capital funds (equity capital for US oil and gas)
ENR Partners (upstream, oilfield service, energy, power, oil and gas sectors)
Kerogen Energy Fund (international oil and gas)
Natural Gas Partners
NGP Natural Resources (oil and gas)
Quantum Energy Partners (North American oil and gas upstream, midstream, oil field service, and power generation sectors)
Resource Capital Fund (mining, including coal)
The Energy and Minerals Group Fund (oil and gas, possibly coal)
While much remains hidden — hedge funds based in the Cayman Islands make limited disclosure, to say the least — MacArthur is more transparent than most foundations about its portfolio. Try to figure out what Bloomberg owns–you can’t.
**The Cambridge benchmark is neither broad-based nor transparent. Foundation trustees who rely on benchmarks provided by the executives who are being benchmarked aren’t doing their job.
Marc Gunther is a veteran journalist, speaker, and writer who reported on business and sustainability for many years. Since 2015, he has been writing about foundations, nonprofits and global development on his blog, Nonprofit Chronicles.
The post The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels appeared first on Alternative Energy Stocks.
http://bit.ly/2RkXRCz
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Text
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
By Marc Gunther.
Eighteen months ago, the people who manage the endowment at the John D. and Catherine T. MacArthur Foundation got some bad news: Investments they had made in funds managed by EnerVest, a Houston-based private equity firm that operates more than 33,000 oil and gas wells across the US, had plummeted in value to almost nothing.
The losses were small, relatively speaking — roughly $15 million, a fraction of the foundation’s $7 billion endowment — but they were unwelcome, if only because they called attention to the fact that MacArthur, whose mission is, famously, to build a “more just, verdant and peaceful world,” had taken a financial hit by investing in fossil fuels.
Lesson learned? No.
Despite its stature as a major funder of climate-change solutions, MacArthur continues to finance the fossil-fuel industry, a review of its most recent federal tax return shows. It does so deliberately–that is, by seeking out opportunities to invest in oil and gas, unlike investors who are inadvertently exposed to fossil-fuel companies because they own broad-based index funds that capture the entire stock market.
The MacArthur endowment holds investments valued at well over $200m in at least a dozen private equity firms,* including Enervest, that finance the exploration, production and distribution of fossil fuels, according to MacArthur’s 2017 Form 990-PF. (The full scope of its fossil fuel holdings can’t be determined because many private equity and hedge funds do not disclose what they own.) Some of MacArthur’s funds are invested in western Canada’s oil sands, which have been called the largest–and most destructive–industrial project in human history. The Chicago-based foundation also invests in mining companies, including those that mine coal in the western US and in South Africa; in Dynegy, a coal-burning utility; and in an energy-related hedge fund, the Cayman Islands-based ZP Offshore Energy Fund.
“SACRED COWS”
The fossil fuel investments persist even as grant-makers at MacArthur sound alarms about climate change. Just last month, Jorgen Thomsen, director of climate solutions at MacArthur, wrote:
Humanity is in dark, uncharted territory…it is time to invest in bringing together leaders of the fossil fuel, energy, insurance, finance, credit ratings, and transportation industries with climate scientists, geoengineering specialists, and environmental advocates for no-holds-barred discussions about what strides and sacrifices must be made by 2030 to avert planetary catastrophe. All parties—including ourselves—must set aside “sacred cows” to come to terms with what is possible…
His blogpost was headlined It’s Time to Break with Convention.
This month, The Chronicle of Philanthropy published a package of cover stories, which I wrote, about foundations and impact investing. The cover story reports that very few of the US’s very biggest foundations have been willing to align their endowments with their grant-making.
In that regard, MacArthur is typical: The Hewlett, Packard, Bloomberg and Moore foundations, all of them major funders of environmental groups that work to curb climate change, also invest in the fossil fuel industry. Like most foundations, they remain unmoved by the GoFossil Free campaign launched by activist Bill McKibben, 350.org, the Sierra Club and Greenpeace in 2012 or by Divest-Invest: Philanthropy, a coalition of foundations that calls on other grant-makers to replace their investments in fossil fuels with investments in climate solutions.
Ellen Dorsey, a leader of Divest-Invest and the executive director of the Wallace Global Fund, is dismayed that major funders have declined to divest fossil fuels and reinvest in clean energy. By email, she told me:
Foundations should not be investing their endowments in industries driving the crises that they are asking their grantees to solve. Foundations are not just ‘any’ investor. They are driven by their mission. They receive charitable tax status to serve the public good. If their investments are harming the public good, they have mission level responsibility to act. If those same investments are financially poor, they are failing in their fiduciary duty, as well. If you are invested in fossil fuels, you own climate change.
She added:
Investing in fossil fuels is not only morally bankrupt, it’s financially bankrupt. The traditional energy sector has been one of the worst performers of the S&P500 for five years running, and in 2018 it was dead last. The shift is structural and one-way. Investors are on notice that the days when fossil fuels delivered strong, stable returns is over.
Dorsey is right that energy stocks have been terrible investments lately, badly lagging the broader markets. Whether that trend will continue is, of course, unknowable. So long us all of us continue to use fossil fuels, energy companies will profit by selling them.
MACARTHUR’S RESPONSE
When I asked Andrew Solomon, managing director for communications at MacArthur, for comment, he replied:
We maintain a small allocation in our investment portfolio to a variety of private energy managers using different strategies, including those that invest in oil, gas, and wind. We believe this allocation is a prudent part of an overall diversified investment portfolio. Diversification helps to ensure that our portfolio returns can adequately support our grantmaking across different potential economic and market environments. Specifically, our allocation to private energy can help protect our overall portfolio against the risk of higher inflation.
We always invest with care and consider carefully a manager’s approach to environmental safety, as well as other factors.
Our investment allocation to private energy is independent of our significant commitment – more than $236 million since 2015– to address climate change through our Climate Solutions strategy and through clean energy impact investments.
Again, it’s important to note that MacArthur is typical of US foundations. Most manage their endowments the old-fashioned way — that is, to make money any way they can, without much regard for the consequences. MacArthur is is one of the few to have carved out a slice of its endowment — albeit just $19 million — for impact investments that align with its missions.
But, of course, all investments have impact — for better or worse.
By investing in fossil fuels, MacArthur supports the industry that has done more than any other to oppose the climate solutions put forth by the environmental groups that it funds. Its grantees include the Sierra Club, the Environmental Defense Fund, the Nature Conservancy, the Natural Resources Defense Council and the Carbon Disclosure Project.
MacArthur also made the first major grant to The World Resources Institute, a respected, non-partisan, business-friendly, science-based think tank in Washington, D.C. MacArthur has given more than $52m to WRI over the years. And what does WRI say about what it calls sustainable investing?
This:
Institutional investors, banks, and other private sector financial institutions oversee trillions of dollars of investable capital. How they choose to deploy these resources will have a large impact on which companies, technologies, and projects succeed and flourish. In a world where the dynamic challenges of climate change, population growth, resource scarcity, and inequality are testing the earth’s limits and our standards for human well-being, it is crucial that these financial actors allocate their capital in a way that accounts for environmental and social risks and supports sustainable solutions.
WRI has spent five years very prudently working to align its own $40m endowment with its vision for a sustainable future. To inspire others to follow, and provide practical guidance, WRI published an excellent report called Learning by Doing: Lessons from from WRI’s Sustainable Investing Journey. One can only hope that WRI sent copies to all its funders, including MacArthur.
To be sure, managing the $7bn MacArthur endowment is more complex than managing the $40m WRI endowment. In a 2017 blogpost, WRI notes that “there are still not enough high-quality investment products to meet demand to fulfill a fully diversified, global, multi asset-class portfolio—the type most institutional asset owners demand.”
But, whatever obstacles remain, it seems past time for the big climate funders like MacArthur to at least begin the process of aligning their endowment with their missions and values, and to explain why they are doing so. They need not go all the way to divestment, but must they invest in some of the dirtiest fossil fuel projects on the planet? The question answers itself.
As for the argument that sustainable investing will damage returns, the evidence increasingly points the other way. In a 2016 blogpost, WRI says: “When evaluated across multiple funds and time periods, sustainable investing exhibits a largely neutral – and oftentimes positive – impact on financial performance.” Some of the world’s most successful investors, including Warren Buffett and David Swensen, say that institutions, including foundations, are making a mistake when they try to beat the markets with actively-managed investments. (See my 2017 blogpost, Warren Buffett has some excellent advice for foundations that they probably won’t take.)
PAY FOR PERFORMANCE?
MacArthur’s financial performance, it turns out, is decidedly average. Foundation Financial Research, a startup company that compiled the first comprehensive database of foundation endowment returns, estimates that the MacArthur endowment generated annualized returns of 8.4 percent for the five-year period ending in December 2017. That places the foundation in the 40th-60th percentile of all foundations. MacArthur did slightly better than the average for all foundations during that period and slightly better than a peer group of larger foundations that pursued a similar investment approach, according to Foundation Financial Research. Different time periods would, of course, produce different results.
Lately, MacArthur has performed well. “Our 2017 returns, posted to our website, were 16.7 percent, which puts us in the 94th percentile for that year compared to a broad universe of foundations maintained by Cambridge Associates,” McArthur’s Andrew Solomon wrote.**
True enough, but the Wallace Global Fund did better. Ellen Dorsey tells me: “Our foundation had returns of 21.6% in 2017, 100% divested, over 16% in climate solutions, and with an additional carve out for mission investments where we accept lower than market returns. We did so well that we put our year end earnings right back in to grants for 2018–doubling our grant budget for action on climate and democracy.”
One final point: MacArthur’s investment costs are not trivial. Private equity and hedge fund managers charge steep fees. Its investment managers are well paid, too.
On its IRS returns, MacArthur reports that Susan Manske, the foundation’s chief investment officer, was paid total compensation, including performance bonuses, of $1.9m in 2017, $1.9m in 2016 and $1.6m in 2015–more than MacArthur’s president, Julia Stasch. Four managing directors in the investment office were paid between $900k and $1m, including performance bonuses. The compensation figures includes unvested incentive compensation, which may not be paid because it is subject to a substantial risk of forfeiture based on future returns, according to MacArthur.
To sum up: MacArthur pays its asset managers generously for generating average returns while investing in ways that make a planetary catastrophe more likely.
Note to self, MacArthur: It’s time to break with convention.
—
*Here is my incomplete list of private equity funds owned by MacArthur, with descriptions drawn from their websites:
ARC Energy Fund (Canadian oil and gas)
Blue Water Energy Fund (oil and gas)
Camcor Energy Fund (western Canada oil and gas)
Encap Energy Capital funds (equity capital for US oil and gas)
ENR Partners (upstream, oilfield service, energy, power, oil and gas sectors)
Kerogen Energy Fund (international oil and gas)
Natural Gas Partners
NGP Natural Resources (oil and gas)
Quantum Energy Partners (North American oil and gas upstream, midstream, oil field service, and power generation sectors)
Resource Capital Fund (mining, including coal)
The Energy and Minerals Group Fund (oil and gas, possibly coal)
While much remains hidden — hedge funds based in the Cayman Islands make limited disclosure, to say the least — MacArthur is more transparent than most foundations about its portfolio. Try to figure out what Bloomberg owns–you can’t.
**The Cambridge benchmark is neither broad-based nor transparent. Foundation trustees who rely on benchmarks provided by the executives who are being benchmarked aren’t doing their job.
Marc Gunther is a veteran journalist, speaker, and writer who reported on business and sustainability for many years. Since 2015, he has been writing about foundations, nonprofits and global development on his blog, Nonprofit Chronicles.
The post The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels appeared first on Alternative Energy Stocks.
http://bit.ly/2RkXRCz
0 notes
Text
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels
By Marc Gunther.
Eighteen months ago, the people who manage the endowment at the John D. and Catherine T. MacArthur Foundation got some bad news: Investments they had made in funds managed by EnerVest, a Houston-based private equity firm that operates more than 33,000 oil and gas wells across the US, had plummeted in value to almost nothing.
The losses were small, relatively speaking — roughly $15 million, a fraction of the foundation’s $7 billion endowment — but they were unwelcome, if only because they called attention to the fact that MacArthur, whose mission is, famously, to build a “more just, verdant and peaceful world,” had taken a financial hit by investing in fossil fuels.
Lesson learned? No.
Despite its stature as a major funder of climate-change solutions, MacArthur continues to finance the fossil-fuel industry, a review of its most recent federal tax return shows. It does so deliberately–that is, by seeking out opportunities to invest in oil and gas, unlike investors who are inadvertently exposed to fossil-fuel companies because they own broad-based index funds that capture the entire stock market.
The MacArthur endowment holds investments valued at well over $200m in at least a dozen private equity firms,* including Enervest, that finance the exploration, production and distribution of fossil fuels, according to MacArthur’s 2017 Form 990-PF. (The full scope of its fossil fuel holdings can’t be determined because many private equity and hedge funds do not disclose what they own.) Some of MacArthur’s funds are invested in western Canada’s oil sands, which have been called the largest–and most destructive–industrial project in human history. The Chicago-based foundation also invests in mining companies, including those that mine coal in the western US and in South Africa; in Dynegy, a coal-burning utility; and in an energy-related hedge fund, the Cayman Islands-based ZP Offshore Energy Fund.
“SACRED COWS”
The fossil fuel investments persist even as grant-makers at MacArthur sound alarms about climate change. Just last month, Jorgen Thomsen, director of climate solutions at MacArthur, wrote:
Humanity is in dark, uncharted territory…it is time to invest in bringing together leaders of the fossil fuel, energy, insurance, finance, credit ratings, and transportation industries with climate scientists, geoengineering specialists, and environmental advocates for no-holds-barred discussions about what strides and sacrifices must be made by 2030 to avert planetary catastrophe. All parties—including ourselves—must set aside “sacred cows” to come to terms with what is possible…
His blogpost was headlined It’s Time to Break with Convention.
This month, The Chronicle of Philanthropy published a package of cover stories, which I wrote, about foundations and impact investing. The cover story reports that very few of the US’s very biggest foundations have been willing to align their endowments with their grant-making.
In that regard, MacArthur is typical: The Hewlett, Packard, Bloomberg and Moore foundations, all of them major funders of environmental groups that work to curb climate change, also invest in the fossil fuel industry. Like most foundations, they remain unmoved by the GoFossil Free campaign launched by activist Bill McKibben, 350.org, the Sierra Club and Greenpeace in 2012 or by Divest-Invest: Philanthropy, a coalition of foundations that calls on other grant-makers to replace their investments in fossil fuels with investments in climate solutions.
Ellen Dorsey, a leader of Divest-Invest and the executive director of the Wallace Global Fund, is dismayed that major funders have declined to divest fossil fuels and reinvest in clean energy. By email, she told me:
Foundations should not be investing their endowments in industries driving the crises that they are asking their grantees to solve. Foundations are not just ‘any’ investor. They are driven by their mission. They receive charitable tax status to serve the public good. If their investments are harming the public good, they have mission level responsibility to act. If those same investments are financially poor, they are failing in their fiduciary duty, as well. If you are invested in fossil fuels, you own climate change.
She added:
Investing in fossil fuels is not only morally bankrupt, it’s financially bankrupt. The traditional energy sector has been one of the worst performers of the S&P500 for five years running, and in 2018 it was dead last. The shift is structural and one-way. Investors are on notice that the days when fossil fuels delivered strong, stable returns is over.
Dorsey is right that energy stocks have been terrible investments lately, badly lagging the broader markets. Whether that trend will continue is, of course, unknowable. So long us all of us continue to use fossil fuels, energy companies will profit by selling them.
MACARTHUR’S RESPONSE
When I asked Andrew Solomon, managing director for communications at MacArthur, for comment, he replied:
We maintain a small allocation in our investment portfolio to a variety of private energy managers using different strategies, including those that invest in oil, gas, and wind. We believe this allocation is a prudent part of an overall diversified investment portfolio. Diversification helps to ensure that our portfolio returns can adequately support our grantmaking across different potential economic and market environments. Specifically, our allocation to private energy can help protect our overall portfolio against the risk of higher inflation.
We always invest with care and consider carefully a manager’s approach to environmental safety, as well as other factors.
Our investment allocation to private energy is independent of our significant commitment – more than $236 million since 2015– to address climate change through our Climate Solutions strategy and through clean energy impact investments.
Again, it’s important to note that MacArthur is typical of US foundations. Most manage their endowments the old-fashioned way — that is, to make money any way they can, without much regard for the consequences. MacArthur is is one of the few to have carved out a slice of its endowment — albeit just $19 million — for impact investments that align with its missions.
But, of course, all investments have impact — for better or worse.
By investing in fossil fuels, MacArthur supports the industry that has done more than any other to oppose the climate solutions put forth by the environmental groups that it funds. Its grantees include the Sierra Club, the Environmental Defense Fund, the Nature Conservancy, the Natural Resources Defense Council and the Carbon Disclosure Project.
MacArthur also made the first major grant to The World Resources Institute, a respected, non-partisan, business-friendly, science-based think tank in Washington, D.C. MacArthur has given more than $52m to WRI over the years. And what does WRI say about what it calls sustainable investing?
This:
Institutional investors, banks, and other private sector financial institutions oversee trillions of dollars of investable capital. How they choose to deploy these resources will have a large impact on which companies, technologies, and projects succeed and flourish. In a world where the dynamic challenges of climate change, population growth, resource scarcity, and inequality are testing the earth’s limits and our standards for human well-being, it is crucial that these financial actors allocate their capital in a way that accounts for environmental and social risks and supports sustainable solutions.
WRI has spent five years very prudently working to align its own $40m endowment with its vision for a sustainable future. To inspire others to follow, and provide practical guidance, WRI published an excellent report called Learning by Doing: Lessons from from WRI’s Sustainable Investing Journey. One can only hope that WRI sent copies to all its funders, including MacArthur.
To be sure, managing the $7bn MacArthur endowment is more complex than managing the $40m WRI endowment. In a 2017 blogpost, WRI notes that “there are still not enough high-quality investment products to meet demand to fulfill a fully diversified, global, multi asset-class portfolio—the type most institutional asset owners demand.”
But, whatever obstacles remain, it seems past time for the big climate funders like MacArthur to at least begin the process of aligning their endowment with their missions and values, and to explain why they are doing so. They need not go all the way to divestment, but must they invest in some of the dirtiest fossil fuel projects on the planet? The question answers itself.
As for the argument that sustainable investing will damage returns, the evidence increasingly points the other way. In a 2016 blogpost, WRI says: “When evaluated across multiple funds and time periods, sustainable investing exhibits a largely neutral – and oftentimes positive – impact on financial performance.” Some of the world’s most successful investors, including Warren Buffett and David Swensen, say that institutions, including foundations, are making a mistake when they try to beat the markets with actively-managed investments. (See my 2017 blogpost, Warren Buffett has some excellent advice for foundations that they probably won’t take.)
PAY FOR PERFORMANCE?
MacArthur’s financial performance, it turns out, is decidedly average. Foundation Financial Research, a startup company that compiled the first comprehensive database of foundation endowment returns, estimates that the MacArthur endowment generated annualized returns of 8.4 percent for the five-year period ending in December 2017. That places the foundation in the 40th-60th percentile of all foundations. MacArthur did slightly better than the average for all foundations during that period and slightly better than a peer group of larger foundations that pursued a similar investment approach, according to Foundation Financial Research. Different time periods would, of course, produce different results.
Lately, MacArthur has performed well. “Our 2017 returns, posted to our website, were 16.7 percent, which puts us in the 94th percentile for that year compared to a broad universe of foundations maintained by Cambridge Associates,” McArthur’s Andrew Solomon wrote.**
True enough, but the Wallace Global Fund did better. Ellen Dorsey tells me: “Our foundation had returns of 21.6% in 2017, 100% divested, over 16% in climate solutions, and with an additional carve out for mission investments where we accept lower than market returns. We did so well that we put our year end earnings right back in to grants for 2018–doubling our grant budget for action on climate and democracy.”
One final point: MacArthur’s investment costs are not trivial. Private equity and hedge fund managers charge steep fees. Its investment managers are well paid, too.
On its IRS returns, MacArthur reports that Susan Manske, the foundation’s chief investment officer, was paid total compensation, including performance bonuses, of $1.9m in 2017, $1.9m in 2016 and $1.6m in 2015–more than MacArthur’s president, Julia Stasch. Four managing directors in the investment office were paid between $900k and $1m, including performance bonuses. The compensation figures includes unvested incentive compensation, which may not be paid because it is subject to a substantial risk of forfeiture based on future returns, according to MacArthur.
To sum up: MacArthur pays its asset managers generously for generating average returns while investing in ways that make a planetary catastrophe more likely.
Note to self, MacArthur: It’s time to break with convention.
—
*Here is my incomplete list of private equity funds owned by MacArthur, with descriptions drawn from their websites:
ARC Energy Fund (Canadian oil and gas)
Blue Water Energy Fund (oil and gas)
Camcor Energy Fund (western Canada oil and gas)
Encap Energy Capital funds (equity capital for US oil and gas)
ENR Partners (upstream, oilfield service, energy, power, oil and gas sectors)
Kerogen Energy Fund (international oil and gas)
Natural Gas Partners
NGP Natural Resources (oil and gas)
Quantum Energy Partners (North American oil and gas upstream, midstream, oil field service, and power generation sectors)
Resource Capital Fund (mining, including coal)
The Energy and Minerals Group Fund (oil and gas, possibly coal)
While much remains hidden — hedge funds based in the Cayman Islands make limited disclosure, to say the least — MacArthur is more transparent than most foundations about its portfolio. Try to figure out what Bloomberg owns–you can’t.
**The Cambridge benchmark is neither broad-based nor transparent. Foundation trustees who rely on benchmarks provided by the executives who are being benchmarked aren’t doing their job.
Marc Gunther is a veteran journalist, speaker, and writer who reported on business and sustainability for many years. Since 2015, he has been writing about foundations, nonprofits and global development on his blog, Nonprofit Chronicles.
The post The MacArthur Foundation Invests In Climate Solutions- And In Fossil Fuels appeared first on Alternative Energy Stocks.
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Don't miss your tax notice's July 10 deadline
Tax notices are among the pieces of mail delivered by the U.S. Postal Service in recent weeks. Due to COVID-19 complications, those documents detailing IRS questions about earlier filings have later due dates. The deadline for some is this Friday, July 10.
It's the first full week of July 2020, meaning that the countdown clock over there in the ol' blog's right column (shameless plug) shows that we're just single digit days away from this year's July 15 filing deadline.
And some folks have an even earlier due date.
If you recently received an Internal Revenue Service notice, you might need to take action by this Friday, July 10.
Delayed notices, later deadlines: Readers of my earlier post on tax moves to make in July probably remember that I mentioned these notices. They were created before the IRS closed most of its offices in March in order to protect its employers from the coronavirus.
When those tax agency staffers returned to their jobs, they began sending out, via the U.S. Postal Service, the pre-printed notices.
But since the deadlines on most of them had already passed, the notice mailings included an insert that offered recipient taxpayers another, later date by which they needed to deal with the IRS questions.
For some, that notice action date is July 15, the same as the deadline for filing a 2019 tax return and paying any due tax.
But for others, the notice action date is July 10.
Type of tax, taxpayers affects due date: The different dates depend upon the type of tax return and original due date.
Below is what the insert, officially titled Notice 1052-A insert, says regarding the due dates:
If the amount due on your notice is for an income, gift, estate, or Form 990-PF or Form 4720 excise tax return that was due on or after April 1, 2020, and before July 15, 2020, (such as a Form 1040 normally due April 15, 2020), the Treasury Department and the IRS postponed the deadline for making your payment to July 15, 2020. If the amount due (as provided on your notice) is not paid by July 15, 2020, penalty and interest will begin to accrue after July 15, 2020. To avoid penalty and interest, pay the amount due by July 15, 2020.
If the amount due on your notice is for a return that was due before April 1, 2020, or an employment or excise tax return due on or after April 1, 2020, you will not be charged additional penalty or interest if you pay the amount due (provided on your notice) by July 10, 2020.
Specific notices affected: You can find a list of all the affected mailing in my June post about the IRS' decision to extend the notice action deadlines.
Did you get one of these communications? Did you look at the notice deadline?
If not, find it and double check your due date. You might need to act even sooner than you thought.
Regardless of whether you must take action by the end of this week or next Wednesday, make sure you do so. If you don't, as the insert notes, you could find yourself paying added penalty and interest charges.
And if you have questions about or disagree with the IRS' finding in the notice, visit the website or call the phone number listed on the document. Just be prepared to wait on hold, as the IRS itself is still ramping up its services.
You also might find these items of interest:
Tax notices: A scary letter from the IRS
Ways to pay that IRS bill that arrived in your mailbox
Don't ignore that IRS letter and nine other tax notice tips
Coronavirus Caveat & More Information
In 2020, we're all dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.
But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.
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