Growing Generosity

Annual Report 2013

This was a positive year for ELFEC onseveral fronts. We experienced solidinvestment results with the portfolioreturning 9.3% on a time-weighted basis– the best return in recent years andahead of the 10-year average of 6.1%. Weadded two new congregational partnersand two new endowments – a trend wehope to continue in the years ahead.Finally, the assets entrusted to us grew to$15.3 million – a healthy increase overthe previous year end’s $13.9 million.These positive results enabled ELFEC todistribute $1.2 million in grants in 2013,with a total of almost $5 million ingrants distributed over the past six years.

While the board was heartened bythese financial milestones, we are alsopleased with the progress in meeting twokey long standing objectives: to positionthe foundation as a leader in sociallyresponsible investing; and to conduct aformal search process for an investmentmanager.

Responsible InvestmentAs a board, we recognized we needed toensure our investment policies were up-to-date and reflected current marketproducts and instruments, and that wewere able to articulate to potentialmanagers what we meant by “responsibleinvestment”.

ELFEC’s investment policies hadalways mandated a requirement forsocially responsible investment choices –but our policies were “high level.” Ourgoal in redrafting our policy was to beclear not only about companies wewould not invest in, but also toencourage investment in companies,where warranted by financial metrics, thathad positive impacts on areas of concernto our communities. We also wanted tobe in a position to be active owners. Our

belief is that change can only happen ifengaged shareholders make their viewsknown to management, and collaboratewith other like-minded shareholders.Our policy requires investment managersto vote proxies and to keep us informedof the positions they take in these votes.

The result is a policy on responsibleinvestment that we believe clearly sets outELFEC’s approach and our expectations.The policy is posted on our web site andwe encourage you to read it and share itwith others.

Investment Manager Search Working with Sustainalytics , a firmspecializing in responsible investmentmanagement, the board created and sentout a request for proposal. The boardreviewed 10 responses, three firms wereinterviewed and after careful discussionand deliberation, Montrusco BoltonInvestments Inc. was selected. The boardlooks forward to a productive relationshipwith Montrusco Bolton over the next fiveyears.

Going ForwardLooking forward to 2014, the ELFEC board will turn its attention to the policyimplications that flow through ourbroader potential partner base and toexploring potential expansion in the rangeof services that we offer. Successionplanning remains a key focus for theboard, both at the management andboard levels. We have a strong boardtoday and believe that the future success of the foundation is linked tomaintaining a strong board.

2013 Director’s Report

Susan Heard, Chair, ELFEC Board

of Directors

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F R O M T H E B O A R D O F D I R E C T O R S

Jeff Pym, Executive Director ELFEC

ELFEC has been managing churchinvestments and helping people set uplegacy gifts since 2008.

In those few short years ourinvestment portfolio has grown to justover $15 million, and our investmentpartners have received handsome returnson their investments. Not only that;they’ve done so secure in the knowledgetheir money is invested in sociallyresponsible funds.

Our other job as a charitablefoundation is to grant money toorganizations doing the hands-on workof making the world a better place. Inour case we support charities andorganizations associated with Canada’sLutheran community.

This money goes to congregations inneed, youth and young adult ministries,

scholarships, international aid projects,and much more.

In fact, through the generosity andfar-sightedness of our donors andinvestment partners, we’ve been able togive away just under $5 million over thepast six years.

Investment partners working with us arethus in a win-win-win situation:

• Their money is earning income at acompetitive rate

• Their funds are invested in sociallyresponsible vehicles

• Both individuals and congregations arehelping support hard-working charitiesand organizations across the Lutheranworld, carrying God’s message of loveand compassion across the globe.

Lutheran Planned Giving

• Established 1997• Mandate: encourage and assist peoplein making gifts to the Church

• Most common form of planned gift:a gift in your will

• Most estates can easily support abequest gift, even after families aretaken care of

• So far we’ve helped donors givealmost $7.5M to the Church

Investment Management

• Montrusco Bolton Investments Inc. is our investment manager

• Focus on preserving capital, generatingincome, and growing funds

• Responsible investment policies• Twelve congregations now workingwith us

• Also manage several endowmentfunds created by individual donors

What the heck is ELFEC?

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E L F E C M I S S I O N

Please get in touch if you’d like our help, either with managing your congregation’sinvestments, or with setting up a gift in your will or a charitable endowment. We’d bedelighted to help!

Jeff Pym, Executive Director / jpym@elfec.ca / 1.888.308.9461

ELFEC has a three-fold mission: to help congregations manage and growinvestments, to help individuals leave gifts to the Church, and to grantmoney to Lutheran charities and other church-related projects.

Riitta Hepomaki wears many hats in herrole as Assistant to the Bishop, but one ofher favourites is chairing the committeegranting scholarships to young Christianstudents.

“The thank-you letters we receiveare so moving,” says Riitta. “Today’sstudents really struggle with the highcosts of post-secondary education, and ascholarship from their church family issometimes the ray of hope that keepsthem going.”

The Synod Scholarship is availableto young people who are members ofEastern Synod congregations and

attending full-time college or universityprograms. Preference is given to first-yearstudents, and awards range from $500 to$2,500, depending on the amountavailable for granting each year, and theneeds of each student.

The program is funded throughendowed gifts, and is open to bequestgifts from others as well.

“It’s no secret the future lies in thehands of our young people,” says Riitta.“It’s a great blessing to support so manyof them in choosing lives and careersreflecting their commitments toChristian love and service.”

Churches all over Canada are investing in solar panels. But whenTrinity Evangelical Lutheran Church in New Hamburg startedlooking into it, there was a small problem. Their money was“tied up” in a fund managed by ELFEC.

“No problem,” said ELFEC, according to Trinity’s thenFinance and Stewardship Chair Rick Ritz.

“They worked with us to come up with a great solution: we’dwithdraw from our own endowment to pay for the panels andinstallation, then use the revenue to pay back the funds. It mademuch more sense than borrowing from a bank, and paying interest.”

“The solar-panel project has been a great way for us tomake a solid commit-ment to stewardship – both of the earthand of the resources we’ve been blessed with,” says Rick.

“We’re so pleased with the returns we’ve received on ourinvestments with ELFEC, and delighted with the creative waythey helped us achieve this goal.”

Scholarships “Heaven Sent” for Many Students

Kristina Kuhnert is studying Humanities

at McMaster University, preparing for a

career in teaching, guidance or counsel-

ling. She is profoundly grateful for her

Synod Scholarship, and writes: “these

funds tell me the Church sees who I am,

recognizes I have made an impact, and

knows I am worth investing in.

Thank you!”

The new solar array on Trinity New Hamburg’s roof is expected

to generate $6,000 per year by selling power back to Ontario’s

power grid. 4

E L F E C F U N D S A T W O R K I N Y O U R F A I T H C O M M U N I T I E S

New Hamburg Solar Panels Yield Rich Rewards

The ELFEC Synod Scholarship Fund awarded $218,000 in post-secondaryscholarships in 2013, helping 158 Christian young people pursue theirdreams of making the world a better place.

When Trinity New Hamburg decided to invest in solarpanels, they withdrew $40,000 from their own ELFEC-managed investments. With plans to replace these fundswith revenue generated through the panels, they willmore than double their money.

A new endowment fund honouringELFEC founding board member DavidPfrimmer will soon be supporting social-justice projects across the Synod.

Of special interest to Dr. Pfrimmeris education and outreach on the issue of responsible investment (RI), and hehopes the fund bearing his name will help.

“Every day I speak to people whostill think investing in socially-responsible vehicles means getting alower return,” says Pfrimmer. “They’redead wrong.”

In fact, Pfrimmer says investing incompanies that operate in socially-conscious ways actually mitigates risk,while also upholding the Church’s valuesaround responsible stewardship. Hehopes grants from the new fund will

help the Church take a central role ineducating both the public and thecorporate sector about this issue.

Established in 2013, the PfrimmerSocial Justice Fund now stands at justunder $30,000, and will begin awardinggrants within the next 12 months.Guidelines for eligible projects should be available by early 2015.

The modest Pfrimmer feels a bit odd having a fund named after him, but is thrilled with its potential for goodwork, both now and in the future.

“They tell me a $30,000 gift cangenerate more than $75,000 in grantsover a 50-year period. So if others aremoved to make gifts to the fund, there’sno limit to the good we can do.”

Gift Supports CLWR Relief Effort in Typhoon-Torn Philippines

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Pfrimmer Social Justice Fund Ready to Make First Grants

When a devastating typhoon hit thePhilippines last November, theinternational community was quick torespond.

As it happened, our Americanbrothers and sisters at Lutheran WorldRelief (LWR) had been working in thePhilippines since the early 1980s, andhave many strong ties in the area. Thisput them in a perfect position to leadrelief efforts. So, when the call forfinancial aid came to us from CanadianLutheran World Relief (CLWR), we werehappy to help.

On behalf of our generous donorswe were able to make a $5,000 gift, whichwas then matched dollar-for-dollar byrelief funds provided by the Canadiangovernment. Those dollars are hard atwork right now helping people rebuildtheir homes, villages and livelihoods.

To date LWR has helped distribute

1,500 shelter kits,allowing families torebuild their dam-aged homes. Theyhave also initiated an important cash-for-work programthat employs resi-dents cleaning debris from publicspaces, thus inject-ing much-neededcash into the local economy.

The third prong of the relief effortprovides vouchers enabling residents toreplace equipment needed to rebuildtheir livelihoods. Many of those affectedwere fishers who lost their boats, netsand other equipment to the storm.

Many thanks to our donors forgiving us the means to help in this much-needed arena.

Delia Moreno with three of her

grandchildren. Delia’s house was

completely destroyed in the storm,

and for months afterward her nightly

shelter was a dining-room table.

Now, with the help of LWR, Delia has

a new home – this one built to

withstand the region’s fierce storms.

E L F E C F U N D S A T W O R K I N Y O U R F A I T H C O M M U N I T I E S

David Pfrimmer, Principal-Dean, Registrar

and Professor of Applied Christian Ethics

at Waterloo Lutheran Seminary, and

founding member of ELFEC.

Lutheran World Relief, Loren H

yatt

This summarized financial information represents thehighlights of our fiscal year and is extracted from theaudited financial statements. RLB LLP performed theaudit. Complete audited financial statements areavailable at www.elfec.ca.

Thanks to the ongoing support of our donors andfunding partners, gifts received reached $1.2M in 2013.ELFEC distributed $1.2 million in grants in 2013, with atotal of nearly $5 million distributed over the past 6 years.

2013 Fiscal Highlights

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Statement of OperationsFor year ended December 31 2013

Revenue $2,517,341

Expenses & Grants $1,299,732

Reinvested Investment $1,217,610Income

Statement of Financial Position As at December 31, 2013

Assets $16,107,621

Liabilities $1,912,206

Net Assets

Endowments $9,047,826

Restricted $5,103,239

Unrestricted $44,350

TOTAL $14,195,415

Eastern Synod Grants

Synod Outreach & Operations $314,487

Scholarships & Bursaries $234,404

Gift to Lutheran Church Jordan & the Holy Land

$80,000

Barrie Mortgage Relief $75,000

Support for Various Ministries $323,318

SUBTOTAL $1,027,209

Other Grants Congregation Donor Directed $55,558

CLWR, Typhoon Relief $5,000

SUBTOTAL $ 60,558

Congregation Managed Funds $ 86,915

TOTAL GRANTS $1,174,682

47%

39%

7% 5% 2%Eastern Synod FundDonations

Individual Donors’Securities

Individual Donors’Cash

Flow-throughDonors’ Securities

Funding Partners

88%

7%5%

Synod

Partner Grants

Others

Gifts Received

2013 ELFEC Grants

Additionally, congregational investment partnersmade capital contributions to new or existing fundstotaling $119,315.

Investment Highlights

In 2013, total assets entrusted to ELFEC grew to $15.3 million – a 10.1% increase over the previous year end’s $13.9 million. Assets are invested according to the investment policy statement established by the ELFEC’s board of directors. This policy was updated in 2013 and is available at www.elfec.ca. The portfolio is managed by a professional investment manager, in accordance with the investment policy, and is overseen by the EFLEC board.

ELFEC’s fund balances represent the totalaccumulated donations received plus the netinvestment earnings on these donations, lessamounts distributed for granting and ouradministration fees. Managed fund ownershipremains with congregations, with income (net of fees) fully granted. The number of funds has increased to 81 in 2013, including twoadditional managed funds and two endowments.

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Fixed Income

Canadian Equities

Cash and High

Interest Accounts

U.S. Equities

International Equities

2013 ELFEC Investment PortfolioDecember 31, 2013

Historical Investment Returns

28.6%

45.9%

13.4%7.3%

4.8%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

12 %14 %

10 Year Return

10 %8 %6 %4 %2 %0 %-2 %-4 %-6 %-8 %

Rate of Return

2008

Total Assets

$- 60

65

70

75

80

85

$5.0

$10.0

$15.0

$20.0

2009 2010 2011 2012 2013

Fun

d V

alu

e (

$M

M)

Nu

mb

er

of

Fun

ds

Number of Funds

We experienced solid investment results in 2013 with the portfolio returning 9.3% on a time-weighted basis – by far, the best return in recent years and ahead of the 10-year average return of 6.1%.

Funds at ELFEC

Many thanks to our supporting partners

Allan Greve, B.S.P., D.H.A.

Rev. Mark Harris, D.Min

Susan Heard, M.A. (Board Chair)

Laurie Kitchen, CA

Bill Kuehnbaum, M.Math

Samuel Marcuson, Eng.Sc.D.

Wendell Schlumberger, CIM

Janina Vanderpost, Ph.D.

Please call anytime for information about making a gift to your church, setting up

an endowment, or enlisting our help in managing your congregation’s investments.

Board of Directors

ELFEC is served by a Board of exceptionally skilled and talented members. We thank them for their faithful service.

74 Weber Street WestKitchener, Ontario N2H 3Z31.888.308.9461 www.elfec.ca