Epsilon Sigma Phi
The Extension Professionals' Organization

Organizational Governing Documents-Policies

Fiscal Policies

Authority and Oversight

Financial Holdings, Investment, and Development Fund Policies

Development Fund Spending Policy

Development Fund Named Donations

Reimbursement Policy for Travel on National ESP Business

Reimbursement Policy for Chapters/Members (non-travel)

Conflict of Interest Policy

Authority and Oversight

The ultimate authority for expenditures shall be by the approval of the National ESP Board. The National ESP Executive Director, however, receives and disburses all funds; maintains financial accounts and records for operational funds and develops and manages the operating budget. (approved by the National ESP Council. (Revision, November 8, 2005)

There shall be three signatures approved (National ESP Executive Director, his/her assistant, and the President) on the operating funds account; and two on the investment funds accounts. Checks issued on these accounts shall require two signatures and a third-party reconciliation of the account. (Passed by action of the National ESP Board, December 3, 2000.)

The National ESP Executive Director arranges for the annual financial review by the Resource Development and Management Committee for the first three years of a four-year cycle with the review being done by a qualified accountant in the fourth year or at any time there is a change in Executive Directors prior to the National ESP Council Meeting. Books are to be closed on December 31.

The annual financial review report is provided to the National ESP Board and the membership at the National ESP Council Meeting.

The National ESP Executive Director also makes official and legal reports as required by IRS. Tax reporting will be done by a qualified accounting firm with information provided by the Executive Director. Tax returns are due to IRS by May 15th of each year.

Epsilon Sigma Phi shall have a credit card in the name of Epsilon Sigma Phi and held in the possession of the National ESP Executive Director for use at his/her discretion regarding Epsilon Sigma Phi business only. The charge(s) should be paid as soon as possible without any finance charges accrued.

The National ESP Executive Director should arrange for Dishonest Employee insurance and casualty insurance as deemed necessary by the National ESP Board. He/she will be responsible for monitoring renewal dates. (Passed by the National ESP Council, October 15, 2010)

The ESP national budget increase will be no more than 10% from one year to the next. (Passed by the National ESP Board, November 8, 2006)

Budget requests that will impact the next annual budget will be submitted no later than the mid-year board meeting of the current year.

During a current budget year, the board may approve spending on scholarships and grants that exceeds the number and amount described in the handbook. Decisions to award additional scholarships and grants should be made based on a recommendation from the SGR Committee and funding available. (Passed by the National ESP Board, November 8, 2006 Amended June 5, 2014)

ESP Financial Holdings, Investment, and Development Fund Policies (Revised 7/2016)

ESP Financial Holdings Financial resources for ESP are held in two groups of funds:

  1. Organizational fund
  2. Development fund. Epsilon Sigma Phi, Inc. is an exempt organization as described in Section 501(c)(3) of the Internal Revenue Code.

ESP Organizational Fund

The primary function of the Organizational Fund (operating funds) of the National Epsilon Sigma Phi is to hold operating funds of the corporation in both investments accounts and as cash to support the daily operation of the corporation. The National Board determines spending from the Organizational Fund based on current needs and aligned with an annual budget approved by the National Council. Sufficient funds to cover one year of operating costs should be held in readily liquid accounts. Other funds may be placed in longer-term investments to provide income for operating expenses or reinvestment for growth, as determined by the National Board. The calendar year serves as the ESP fiscal year.

ESP Development Fund

The primary function of the Development Fund of the National Epsilon Sigma Phi is to hold both endowed invested funds (in both restricted {member donations} and non-restricted {earnings} investment accounts) and limited cash as charitable assets and to distribute income in accordance with the Spending Policy in support of mini-grants, scholarships, professional recognition, and management expenses to support the professional development mission of ESP as directed by the National Board.

The National ESP Council took steps in 1985 to establish a National Epsilon Sigma Phi Foundation to foster even greater emphasis on "Partnership in Professional Excellence" among ESP members and the Cooperative Extension System as a whole.

Epsilon Sigma Phi's most valuable asset is the quality of the Extension faculty/staff dedicated to serving people across the nation. Membership dues provide a base of financial support, within the chapters and nationally, for the ongoing operations of our organization. But, private tax-exempt contributions are necessary to provide an extra margin of excellence. After receiving legal counsel in 2002, the fund name of Foundation was dropped and Development Fund was determined to be the more appropriate designation.

Epsilon Sigma Phi has a commitment to future excellence through the Development Fund to:

  • Provide scholarships for professional development and graduate study to promote teaching and research excellence to members.
  • Provide grants to chapters for professional development programs.
  • Recognize and reward Extension professionals who have demonstrated outstanding educational competencies, professionalism, and programming.
  • Publish the latest literature on professionalism and professional development opportunities for Extension faculty/staff.
  • Prepare resource materials that chapters can use to emphasize professionalism to prospective members.
  • Update and maintain a record of Epsilon Sigma Phi history and encourage chapters to implement Extension history projects.

Annual Development Fund campaign years begin on June 1 and run through May 31 of the following year with all collections for the current campaign year held in the bank account until November 1 when they are deposited to the Patten and Patten account. At the same time, a draft is made on the Patten and Patten account for the annual funds as specified in the Development Fund budget for the upcoming budget year. (dates revised October 2019)

The Scholarship Auction at the National ESP Conference generates revenue for the Development Fund. Half of the auction proceeds go to the Development Fund and half to the Organizational Fund.

Investment Policy for Epsilon Sigma Phi, Inc 
Approved National Board August 12, 2010, Amended in August 2012

Purpose

The purpose of the investment policy is to provide a clear understanding of the investment policy, guidelines, and objectives for the total portfolios of both the Development Fund and Organization Fund of National Epsilon Sigma Phi (ESP) for the Resource Development and Management Committee (RD&M), National Board, investment advisors, potential donors, and others.

This policy provides a governing basis for the management and disposition of liquid assets (including cash and non-cash items) held as investments by National Epsilon Sigma Phi, Inc.

The following guidelines have been set forth to give the fund manager(s) an overview of the general investment philosophy and orientation of the RD&M responsible for the funds, and to provide prospective donors information about the investment of funds in the RD&M care. The intent is to give broad direction allowing for the flexibility necessary for the fund managers to successfully implement their investment strategy.

The RD&M has allocated to the Patten & Patten, Inc. responsibility for implementing these guidelines.

Investment Objectives

The principle objectives of both funds’ investment programs shall be:

  • Preservation of capital on an absolute basis
  • Generation of income to fulfill charitable purposes of Epsilon Sigma Phi
  • Growth of asset value at a rate greater than inflation (as measured by the Consumer Price Index)
  • Provide market (S&P 500) equivalent income

Achieving these objectives will require assuming a moderate level of risk, a longterm investment horizon and diversification among assets. The funds will be invested to maximize total return (capital appreciation, interest and dividend income) consistent with a prudent level of risk.

Funding of Withdrawals/ Distributions

The ESP Organizational Fund has requirements and expectations for part of the funds to be periodically withdrawn for programs and expenses. Resultant periodic cash requirements will fluctuate somewhat but should usually be able to be deferred for a 30-day period.

The ESP Development Fund has requirements and expectations for periodic withdrawals for programs and expenses. Resultant periodic cash requirements will fluctuate somewhat but should usually be able to be deferred for a 30-day period. The investment manager(s) will be made aware of these requirements and will be responsible for employing a strategy to meet these needs. The National Board anticipates that the funds will be provided from cash and cash equivalents and investment income earnings. The principal is endowed and cannot be spent; organization funds will be used to make up unmet needs.

Asset Allocation

The Resource Development and Management Committee and National Board have established the following asset allocation guidelines.

Any significant deviations from the established allocations will require approval upon the recommendation of the Investment Manager. Those deviations of no more than 10% points above or below the established range would be in response to “non-normal” market or economic conditions that would be considered temporary or short term.

The Chair of Resources Development and Management Committee with approval of the National Board would grant the Investment Manager sufficient latitude to preserve the capital of the funds.

Cash and Equivalents – (Development Fund 0 - 10% of assets) (Organizational Fund 10 - 40% of assets) Short-term investments shall consist of obligations of the U.S. Government, U.S. Agencies and corporate issues rated A or better by one-year maturity or less, and the two highest grades of commercial paper. Additionally, a money market fund or comparable investment vehicle with like investments may be used.

Fixed Income – (Development Fund 30 - 70% of assets) (Organizational Fund 30 - 50% of assets) The quality of the fixed income securities shall not be rated less than “A” by Moody’s or Standard and Poor’s. Maximum ownership of any one issue, exclusive of U.S. Government issues shall be 15% of the fixed income portfolio at cost. Private placements or other restricted securities shall not comprise more than 10% of the fixed income portfolio cost. Cash positions should conform to investments described in section A.

Equities – (Development Fund 30 -70% of assets) (Organizational Fund 30 – 50% of assets) The portfolio may hold common stocks publicly traded on U.S. Exchanges, NASDAQ listed stocks and securities convertible into such stocks. Equity investments in any major sector classification shall not exceed 20% of the market value of the total equity portfolio. Equity investments in any single issue shall not exceed 7% of the equity portfolio at market value. Cash positions should conform to investments described in section A.

Return Objectives/ Loss Limits

Both the Development Fund and Organizational Fund annual total return objective for the total portfolio is an absolute return net after all expenses of at least 7% of the beginning of year asset value adjusted for deposits and withdrawals. Returns will be measured over a five-year period.

Although investment objectives are long term, performance and activities of the manager(s) will be evaluated at least on an annual basis. Standards of performance will include the best of:

  • Expected minimum net total return (appreciation plus income) exceeding inflation by 4% for equities and 2% for fixed income over a five-year period.
  • Expected total return compared to the market to equal or exceed an applicable equity or fixed income index.
  • Rank in the top half of similar “style” equity and fixed income managers in a database each calendar year.

Losses over a five-year period should be limited to 15% of the beginning value or maximum value; whichever is greater, in the equity portfolio and 5% in the fixed income portfolio.

Evaluation and Performance Criteria

Investment managers can expect to be evaluated using both absolute and relative criteria. Two or more of the following relative performance benchmarks will be used to evaluate overall performance in each area of portfolio allocation. Manager comments, on which are the most appropriate index to use in measuring the manager's performance, are welcome. Comparisons will be made at least annually.

Equities:

S&P 500 composite index – largest 500 companies, weighted by capitalization Wilshire 5000 index – 5,000 companies, weighted by capitalization Other managers with a similar investment style Any other equity performance index with component issues similar to those of the equity portfolio.

Fixed Income:

Lehman Brothers intermediate government/ corporate bond index – average maturity 4-5 years Other managers with similar investment style Any other fixed income performance index of issues with maturity and quality similar to the fixed income portfolio.

Inflation:

Consumer Price Index (CPI) The Resource Development and Management Committee and National Board may employ a professional investment advisor or consultant to perform ongoing independent investment performance analysis.

Prohibited Transactions

Investment activities in the following are prohibited:

  • Margin purchases
  • Derivatives and hedge funds
  • Private placements or other restricted securities
  • Commodities (such as wheat, corn, cattle etc, excludes commodities such as gold)
  • Foreign issues, unless traded on U.S. Exchanges or markets

Communication and Review

Monthly statements of activity are to be forwarded to the ESP Executive Director, Chair of Resource Development and Management Committee and the investment advisor. Otherwise statements are to be forwarded quarterly.

Investment manager(s) should expect to provide annual or semi-annual portfolio presentations to Epsilon Sigma Phi, which will include reports of portfolio status, returns, and performance comparisons to appropriate benchmarks, economic outlook, investment strategy and other related matters, which would be of interest to the ESP Board. Ongoing communication by phone, letter or personal consultation will be required as deemed necessary by the investment advisor and/or the ESP Executive Director. The Resource Development and Management Committee and National Board place great trust in and emphasis on the investment strategy employed by the fund’s managers. Any material changes to or deviations from a manager’s approach must be communicated and justified to the ESP Executive Director and the Chair of the Resource Development and Management Committee. ESP requires the managers to communicate any significant changes in management or investment personnel immediately.

Plan Review

The managers shall be responsible for reviewing these guidelines with the ESP at least annually to assure that they remain valid and relevant. Any recommendations as to changes should be submitted in writing to the Chair of the Resource Development and Management Committee and the Executive Director of the National ESP.

ESP Development Fund Spending Policy (Adopted 9/1/2011)

Spending Policy

All contributions will be recorded as principle and added to the corpus (endowed principle).

The annual amount available from the Development Fund is based on our spending policy. The standard spending policy rate is 5%. The annual amount is determined by applying the spending policy rate to the fund’s twelve quarter average market value of its investments as of March 30th of the prior year.

Auction Proceeds

The fifty percent (50%) of the National Conference Auction proceeds designated for the Development Funds will be used to meet the annual obligations of the Development Fund distribution.

Year End Balances

At the end of each fiscal year the Resource Development and Management Committee will make a recommendation on the remaining balance of the annual distribution per the disposition of these funds. Priority consideration should be given to the addition of these remaining funds to the Development Fund principle. Appropriate uses of the annual distribution are described above in ESP Financial Holdings, Section 1.


ESP Development Fund Named Donations (Approved by ESP National Board 5/2015)

National Epsilon Sigma Phi has an ongoing ESP Key Contributor program in which contributions can be made over many years and the accumulative total determines the Key Recognition Level in which one is recognized.

An ESP Named Donation Program starts July 1, 2015 which will allow an individual or chapter to “name” an award after a person (or chapter) and state the purpose for which a donation of $25,000 or more is given.

Pledges can be made for payment over 5 years. Naming goes into effect and the award is officially established when the corpus (principal) is fully paid. An accumulated ESP Key contributor has the option to convert an accumulated donation into a named donation when $25,000 or more has been received according to ESP records.

A named donation can be restricted or unrestricted. A restricted account would give the donor spending authority to establish the name and purpose for which the donation will be used with the agreement of the ESP Board, and its appropriate national committee(s). An unrestricted account would give the ESP Board with input from the appropriate ESP national committee spending authority on the donation.

ESP Development Fund investment policy and spending policy will be applied to all named funds. Named funds will be tracked as sub-funds in the ESP Development Fund. Records will be kept on each named award to track market value and expenditures. This record is to be available for review by the donor and members.

Reviewed, Revised and Adopted July 2016




Epsilon Sigma Phi is a
501(c)3 non-profit organization.


55 Walton Place Drive
Newnan, GA 30263
470-347-0394

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