[D9640general] [eFlash_Rotary] Digest Number 856

[Garry Krischock]

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Wc2BF9TAzk3MzU5NzE1BGdycElkAzI3ODYwNzYEZ3Jwc3BJZAMxNzA1MDY0MDg2BG1zZ0lkAzE1N
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Financial update for 2008 

Thu Jan 1, 2009 8:35 pm (PST) 

Financial update for 2008 

Dear Rotarians,

The current investment climate continues to present challenges to our 
organization. Since 30 September, Rotary International's General Fund 
declined another 16.1 percent, resulting in a fiscal year-to-date 
investment loss of 24 percent, or US$22 million. The Rotary 
Foundation's investments (except for the PolioPlus Fund) also have 
experienced declines in line with the markets, resulting in losses of 
$165 million from July through November. 

As we previously reported, nearly all losses to date are unrealized 
(i.e., due to declines in the market prices of the securities held 
and would be realized only if the securities are sold). Because 
Rotarians have continued to pay their dues on time and make generous 
contributions to the Foundation, we have not had to sell any of our 
investment securities to meet operating expenses.

You have likely read about the securities fraud committed by Bernard 
Madoff. Through one of its hedge fund managers, the Foundation had 
minor exposure (less than 0.1 percent of the Foundation's total 
investments) to one of Madoff's investment vehicles. We are working 
with our independent investment consultants to minimize this loss and 
reduce Rotary's risk in this area.

Investment earnings, and if necessary, operating reserves, are used 
to fund a portion of RI's operating expenses, and all of the 
Foundation's operating expenses. While RI's reserves remain above the 
Board's targeted level, the Foundation's reserves have declined 
significantly below the level required by the Trustees. Therefore, we 
(your Board of Directors and the Trustees of The Rotary Foundation, 
and your Secretariat staff) have been reducing spending and are 
taking the following actions:

Deferring all nonessential activities, including committee meetings 
Canceling all nonessential discretionary spending, including staff 
and volunteer travel, overtime expenses, temporary help, consultants, 
and staff development 
Reducing staff and volunteer costs while traveling on Rotary 
International and Foundation business 
Preparing contingency plans and austerity budgets for 2009-10 
As noted in my previous communications, Rotary's senior leaders, the 
Financial Services staff, Rotary's investment consultants, and I 
continue to closely monitor the financial markets. We are taking all 
possible steps to ensure that Rotary remains financially strong in 
this difficult economic environment.

Sincerely,

Ed Futa
General Secretary 

Source: Rotary International / Courtesy: eFlash_Rotary

 

 

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