Contract analysis

I. PURPOSE AND SCOPE A. Purpose of the Investment Policy Statement This Investment Policy Statement (the "IPS") sets forth the investment objectives, guidelines, and restrictions governing the management of the investment assets of The Caldwell Family Foundation (the "Foundation"). The IPS is intended to serve as the principal governing document for all investment-related decisions undertaken by the Foundation's Boar

1. Jonathan R. Caldwell, President

2. Eleanor V. Caldwell, Vice President

3. Thomas R. Caldwell, Secretary

4. Katherine C. Hartfield, Treasurer

5. Olivia G. Caldwell, Director

6. Dr. Margaret P. Elsworth, Independent Director The Board shall ensure that any amendments to this IPS are documented in writing and appended to or incorporated into this document, with the date of amendment and the names of the directors approving such amendment clearly recorded.

II. GOVERNANCE AND RESPONSIBILITIES A. Board of Directors Ultimate fiduciary responsibility for the Foundation's investment program rests with the Board of Directors. The Board's duties in connection with the investment program arise from both state law—principally the fiduciary standards set forth in the NY N-PCL and the NY PMIFA—and federal tax law, which imposes excise taxes and penalties on private foundations th

III. INVESTMENT OBJECTIVES A. Primary Objective The primary investment objective of the Foundation is to preserve the real (inflation-adjusted) purchasing power of the Foundation's endowment over the long term while generating sufficient returns to meet the annual five-percent (5%) minimum distribution requirement imposed on private foundations under Section 4942 of the Code. In addition, the investment portfolio mus

IV. ASSET ALLOCATION GUIDELINES A. Strategic Asset Allocation The Board has established the following strategic asset allocation targets and permissible ranges, which are designed to achieve the Foundation's return, risk, and liquidity objectives as described in Section III of this IPS. These targets reflect the Foundation's moderate risk tolerance, its perpetual time horizon, and its need for a balance of growth, in

V. INVESTMENT GUIDELINES AND RESTRICTIONS A. Permitted Investments Subject to the restrictions set forth in Section V.B below and the asset allocation guidelines established in Section IV, the following categories of investments are permitted for the Foundation's portfolio: (a) Publicly traded equity securities, including common stock, preferred stock, and American Depositary Receipts (ADRs), listed on a recognized s

1. Jeopardizing Investments — IRC § 4944 Compliance

Section 4944 of the Code imposes a ten-percent (10%) initial excise tax on a private foundation that makes an investment that jeopardizes the carrying out of any of its exempt purposes, and an additional five-percent (5%) tax on any foundation manager who participated in such investment knowing that it constituted a jeopardizing investment. The Foundation is committed to avoiding any investment that could be characte

2. Excess Business Holdings — IRC § 4943 Compliance

Section 4943 of the Code imposes excise taxes on private foundations that hold, together with all disqualified persons, interests in business enterprises that exceed specified thresholds. In general, the combined holdings of the Foundation and all disqualified persons (as defined in Section 4946 of the Code) in any business enterprise may not exceed twenty percent (20%) of the voting stock of such enterprise, reduced

3. Self-Dealing Restrictions — IRC § 4941 Compliance

Section 4941 of the Code imposes excise taxes on acts of self-dealing between a private foundation and its disqualified persons. The Foundation is committed to the strict avoidance of any transaction that could constitute an act of self-dealing within the meaning of Section 4941. The following investment-related restrictions are imposed: (a) No investment transaction shall be made with, or for the economic benefit of

4. Other Restrictions In addition to the foregoing restrictions, the Foundation's investment portfolio shall be subject to the following additional limitations: (a) No Leverage. The Foundation shall not use leverage (margin borrowing) against Foundation assets. No Foundation securities shall be held in a margin account, and no investment shall be financed with borrowed funds. (b) No Direct Real Property Ownership. Th

VI. SPENDING POLICY AND MINIMUM DISTRIBUTION COMPLIANCE A. IRC § 4942 Minimum Distribution Requirement As a private foundation, the Foundation is required to distribute annually for charitable purposes an amount equal to at least five percent (5%) of the average fair market value of its net investment assets (i.e., non-charitable-use assets) determined on a monthly basis for the preceding taxable year. The Foundation

VII. EXCISE TAX CONSIDERATIONS — IRC § 4940 A. Tax on Net Investment Income The Foundation is subject to an excise tax on its net investment income under Section 4940 of the Code. As amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2019, the excise tax is imposed at a flat rate of 1.39% of net investment income. The prior two-tier rate structure (under which certain foundations could qualify for a red

VIII. PERFORMANCE MONITORING AND REPORTING A. Benchmarks The performance of the Foundation's investment portfolio shall be measured against the following benchmarks, which have been selected to correspond to the strategic asset allocation targets established in Section IV of this IPS. Overall Portfolio Benchmark. The overall portfolio benchmark is a blended composite benchmark reflecting the Foundation's target asset

IX. CONFLICT OF INTEREST AND ETHICAL STANDARDS A. Disqualified Persons For purposes of this IPS and the Foundation's compliance with the private foundation excise tax rules, disqualified persons are defined as provided in Section 4946 of the Code and include the following individuals and entities: (a) All substantial contributors to the Foundation, including Jonathan R. Caldwell and Eleanor V. Caldwell; (b) All found

X. SOCIALLY RESPONSIBLE INVESTMENT CONSIDERATIONS The Board recognizes that the Foundation's investment portfolio represents not only a financial endowment but also an expression of the Foundation's values and mission. The Foundation's charitable mission focuses on support for the arts, education, and environmental conservation, with a particular emphasis on the New York metropolitan area. The Board believes that the

XI. AMENDMENTS, EFFECTIVE DATE, AND SIGNATURES A. Effective Date This Investment Policy Statement shall be effective upon adoption by the Board of Directors of The Caldwell Family Foundation at a duly convened meeting of the Board at which a quorum is present, or by unanimous written consent of the Board in lieu of a meeting. B. Amendment Procedure This IPS may be amended at any time by approval of a majority of the

Section 4940 — Excise Tax on Net Investment Income. Section 4940 imposes an excise tax on the net investment income of every domestic private foundation. The current tax rate is 1.39% of net investment income. Net investment income incl