This policy is established to ensure that Idea Exchange funds including, but not limited to, operating and Donation Investment funds are invested to provide optimal returns with a prudent level of risk as approved by the Library Board. The policy provides principles and guidelines designed to ensure that funds are invested in such a manner that both liquidity and growth are met and assets are protected. Ultimately the investment of funds and returns generated are to be used to ensure the long-term advancement of the Mission, Vision and Values of the organization.
This policy guides the actions of the Library Board, Chief Executive Officer (CEO) and Director, Finance and Facilities.
Canadian Deposit Insurance Corporation (CDIC) is a Government of Canada crown corporation that contributes to the stability of the Canadian financial system by providing deposit insurance against the loss of eligible deposits at member institutions in the event of failure.
Discretionary Funds mean funds which are not required to support the immediate ongoing cash requirements of the organization
Invest means to allocate money in the expectation of some benefit in the future.
Liquidity means measure of an asset’s convertibility to cash.
Prudence means the use of care, caution, good judgement, and minimal danger or risk.
Idea Exchange’s main objective is to invest discretionary funds in a prudent manner that provides optimal returns and minimizes risk while meeting the daily cash requirements of the organization and conforming to legislation governing the investment of public and restricted funds.
The objectives of this Investment Policy are to:
- Protect assets – minimize the risk of incurring a capital loss and preserve the value of invested principal.
- Maintain liquidity – investments shall be managed to minimize cash flow risk so as to meet reasonably anticipated fiscal operating requirements.
- Minimization of risk - all attempts shall be made to minimize risks inherent in investment through diversification so as to eliminate the risk of loss resulting from an over-concentration of funds in a specific maturity, issuer, industry or class of securities.
- Maximization of income – investment yields that maximize returns as is reasonable and prudently achievable within defined parameters.
Idea Exchange maintains the following funds:
- Operating Funds – budgeted income and expense monies used for operating requirements.
- Donation Investment Funds – contributions received from donors or from fundraising activities or any other contribution authorized by the Library Board. Donation Investment funds may be restricted for a particular use as stipulated by a donor or unrestricted as to use.
The directing and monitoring of Idea Exchange’s investments will be the responsibility of the Director, Finance and Facilities, in consultation with the CEO, as authorized by the Library Board.
The Library Board may delegate some of its responsibilities with respect to the investments to agents and advisors.
Agents and Advisors
As of the current revision date the Library Board has established Managed Funds with the Waterloo Region Community Foundation (WRCF). The Managed Funds have been established to invest a portion of the Library and Gallery Donation Investment Funds. These investments are managed in accordance with the written agreement between the Library Board and the WRCF and the WRCF Investment Policy.
The nature of the arrangement is reviewed periodically by the Library Board and can be amended or cancelled within the terms of the agreement.
The Director, Finance and Facilities will invest discretionary funds as follows:
- Operating Funds that are in excess of monthly operating expenditures will be held with the organization’s CDIC insured commercial financial institution in an interest bearing savings account, Certificates of Deposit, Term Deposits or Guaranteed Investment Certificates (GIC).
- Donation Investment Funds will be held by either:
- The City, in trust for Idea Exchange, and will be invested in accordance with the Municipal Act, 2001 as amended, and/or
- An Advisor or Agent as approved by the Library Board
- Investment Income – any realized investment income, net of costs, shall be credited to the fund balance that generated the income. Investment income earned on endowments shall be credited to the specific endowment fund. Investment income earned on restricted donations shall not be considered to be restricted.
An agent/advisor will provide quarterly reports to the Library Board. This report will include portfolio transactions, balances (market values), asset mix information, management fees expenses, income, and realized and unrealized gains, as applicable. At the discretion of the Library Board, a representative of an agent/advisor may meet with the Board.
The City will provide an annual report to the Director, Finance and Facilities detailing Donation Investment Fund balances and income.
The Library Board will be provided with the annual audited financial statements which include Donation Investment Fund balances. In addition, the Director, Finance and Facilities, will provide the Library Board with an annual report detailing Donation Investment Fund transactions and balances including restricted and unrestricted amounts. Should more detailed information be required by the Library Board on any Fund, the Director, Finance and Facilities, will be responsible to prepare a suitable report.
This policy will be reviewed bi-annually by the Library Board with recommendations from the C.E.O. and Director, Finance and Facilities.
Adopted: November 28, 2018 (Board Motion 18.66)
Revised: December 14, 2022 (Board Motion 22.86)