Endowment:Wikimedia Endowment Investment Policy
 | This policy is approved by the Wikimedia Endowment Board of Directors. Please note that in the event of any differences in meaning or interpretation between the original English version of this content and a translation, the original English version takes precedence. |
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Purpose
The purpose of the Wikimedia Endowment is to serve as a permanent safekeeping fund to generate income to support the operations and activities of the Wikimedia projects in perpetuity. The intent of this Investment Policy Statement (the "IPS") is to articulate an investment strategy with specific parameters that reflect the philosophy of the Wikimedia Endowment Board (the "Board"). The Board has delegated to the Finance Committee (the "Committee") the fiduciary responsibility to oversee the Endowment's investment activities and to recommend appropriate actions to the Board.
Investment Objectives
The Committee strives to provide a source of income for spending and support corpus growth, both of which are reasonably stable and predictable from year to year. The primary goal of the investment program is to preserve the purchasing power of the Endowment by achieving long-term returns that meet or exceed the sum of the expenditures on spending policy allocations, inflation, and consultant, manager, and custodial fees.
Time Horizon: Perpetual.
Return Objective: Target, over the long term, an average annual real total return of 6.5%, net of fees.
Risk Tolerance: The volatility of the Endowment should be approximately similar to that of the Policy Benchmark (detailed later in this IPS).
Liquidity Needs: The Endowment should maintain an overall level of liquidity to ensure sufficient capital is available for the Endowment's annual budget, operational needs, and grantmaking opportunities (in line with spending goals).
Unique Circumstances: This IPS is governed in tandem with the Endowment's Spending Policy and Gift Policy.
Pursuit of these investment objectives shall comply with all applicable federal, state, and local laws, rules, and regulations, including the Uniform Prudent Management of Institutional Funds Act (UPMIFA). Investments shall be made with consideration of the Endowment's 501(c)(3) tax-exempt designation, both in terms of the strategies used and also the potential Unrelated Business Income Tax ("UBIT") consequences.
Roles and Responsibilities
The Board is ultimately accountable for the Endowment's investment activities, including through periodic review and approval of the IPS. The Board has designated the Committee to oversee implementation of the Endowment's IPS. The Committee members are required to discharge their duties solely in the interest of the Endowment and for the exclusive purpose of meeting the financial needs of the Endowment. The Committee has the discretion to allow exceptions to the guidelines outlined in this IPS.
The Investment Team is responsible for the administration of investments and associated cash flows, presenting investment opportunities to the Committee for authorization when required, and sourcing and recommending advisors and managers to the Committee, within the framework set by this IPS.
Asset Class Mix
The Endowment is divided into three broad asset classes.
Public Equities: The Equities portfolio will consist mainly of investments in public equities. Designed to be the principal contributor toward achieving the return target, the Equities portfolio may include areas like ex-US Developed and Emerging Markets equities.
Public Fixed Income: The Fixed Income portfolio will consist mainly of investments in investment-grade marketable bonds as well as short-term liquid investments and cash equivalents. The Fixed Income portfolio is designed to meet near-term operating obligations of the Endowment, provide capital for rebalancing, reduce the Endowment's overall volatility, provide a measure of deflation protection, and, if possible, generate current income.
Alternatives: The Alternatives portfolio will consist mainly of hybrid real estate investments, via publicly traded REITs. The Endowment may allocate to areas like venture capital and private equity in the future.
Portfolio Construction
The Investment Team shall utilize well-researched indexed funds to construct its portfolio. The Endowment is not contemplating using individual outside managers and separately-managed mandates at this time. The Endowment prohibits the use of leverage in its portfolio.
Although the Endowment prohibits the direct use of derivatives in implementing its portfolio, certain indexed strategies are permitted to invest in the publicly traded securitized sector of the market. For example, a fixed-income mutual fund tracking the Bloomberg US Aggregate Bond Index may invest in publicly traded mortgage-backed and asset-backed securities.
Asset Allocation and Rebalancing Guidelines
The asset allocation includes the long-term target for each asset class as well as the allowable allocation range around each target. The allowable allocation ranges help to ensure adequate diversification, define the permissible magnitude of tactical asset allocation, and constrain both absolute and relative risk. The Investment Team is authorized in its discretion to adjust the allocation to each asset class within the approved allocation ranges.
| Asset Class (Benchmark) | Benchmark Index | Target Allocation | Minimum Allocation | Maximum Allocation |
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| Public Equities
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S&P 500 | 50.0% | 45.0% | 55.0% |
| ex-US Developed Market Equities | FTSE Developed All Cap ex-US | 20.0% | 15.0% | 25.0% |
| Emerging Market Equities
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FTSE Emerging Markets All Cap | 2.5%
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0.0%
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5.0%
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| Public Fixed Income
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Bloomberg US Aggregate Bond | 20.0% | 15.0% | 25.0% |
| US Cash & Equivalents
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Bloomberg US T-bill 1-3 Month | 5.0%
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5.0%
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10.0%
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| Alternatives
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MSCI US REIT
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2.5%
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0.0%
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5.0%
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The Endowment shall rebalance its portfolio as necessary to ensure its asset allocation remains within the allowable target ranges.
Policy Benchmark
The Policy Benchmark is the blended index resulting from combining the benchmark indices for each asset class using their respective target allocation weights per the Asset Allocation section above.
Environmental, Social, and Governance (ESG) Investments
As a perpetual support fund for the Wikimedia Projects, the Endowment shall first prioritize its risk/return requirements and operational obligations. ESG factors, in addition to many other factors, may have an impact on investment performance over the long term. The Endowment will consider ESG ratings when analyzing and selecting investments and report on the overall ESG performance of the fund using publicly available ESG ratings.
Reporting and Review
Investment performance shall be evaluated quarterly. The Investment Team may also discuss other aspects of the Endowment's investment strategy with the Committee on an as-needed basis. The Investment Team shall incorporate absolute outcomes (risk/return goals) and Policy Benchmark outcomes (vs. the Endowment's blended index) in its investment performance reporting.
The Committee shall review the IPS annually.
Adopted February 8th, 2024 by the Wikimedia Endowment Board of Directors.