During the early part of February, I had an opportunity to spend some vacation time in Florida with my wife enjoying the sun, walking, swimming—not doing anything at all that might be described as demanding. I got to a Jets game in Tampa (which we won). I also read a few books.

One, entitled Confidence Men, written by Pulitzer Prize-winning author Ron Suskind, is about the first two years of the Obama administration and the financial crisis. As we now know, the unethical practices of leading American financial institutions prior to 2008, led to a meltdown on the markets that the world is still trying to recover from today.  Every organization and individual with investments was profoundly affected. Certainly, The Winnipeg Foundation has felt the negative impact.

There were a variety of causes, including a seriously weakened regulatory framework, the capacity of new technology, overly complex financial instruments which pushed legal limits, ill-advised compensation practices, weak private sector governance and a consumer-driven culture where people routinely bought what they could not afford.

I found one section of the book to be of particular interest. Goldman CEO Lloyd Blankfein is testifying before a government committee and talks about why there is such confusion about the role of banks. We see that in the mind of the public, banks are generally viewed as fiduciaries. They have a duty of care; the interest of the client comes first. When they sell an investment to a client, the client expects that the bank believes in the investment. But, in fact, that was not the case. The banks were selling investments they knew were of questionable value and, even worse, were betting through the market that these investments would soon rapidly decline in value.

That got me thinking about The Winnipeg Foundation. We unquestionably have a duty of care with respect to our donor’s gifts. Ever since 1921, generous people from all walks of life have contributed to “their” community foundation with an expectation that we would act prudently in good times and bad.

In these turbulent times, acting with a duty of care in mind is not as straight-forward as protecting the invested capital of the Foundation. Donors to endowments give money to provide sustainable support to the community and its charitable agencies. So there must be a balance between protecting capital for the long run and making annual grants for immediate impact.

Over the past five years, our investments have earned an annual average return of just over 2%. This is not enough to cover the cost of our distributions. We have traditionally granted 5% of our asset value, though in recent years, this rate has been gradually reduced. This year it is 4.4%. So, during these troubled years, we have been using some capital to continue grant distributions to the community.

In reflecting on the many policy discussions at our Committees and Board, I think we have struck the balance right. We are working to create a predictable revenue stream for the community while at the same time, building an investment strategy that will deliver long term sustainability. Every year, we model and review our assumptions as we apply our own “duty of care.”