Proud to be a leader in good corporate governance for nonprofits

Led by Jeff Lambright, the department employs a strategic, risk-based approach, with an emphasis on collaboration, to add value to all areas of the organization.

The department performs:

• Financial audits to ensure our financial records are fairly stated
• Operational audits to assess controls and processes while ensuring adequacy
  and effectiveness
• Compliance audits to evaluate IUF and IU efforts to comply with donor intent

The department also provides assurance and advisory services to meet the ever-changing needs of the organization. Coordinating its efforts with those of management helps ensure IUF strategic goals and objectives have the greatest chance of success. Special engagements may be scheduled at the request of the board or management to provide special technical expertise and services.

The Foundation and the Trustees of Indiana University have approved a formal operating agreement designed to govern the relationship between the parties and the terms and conditions under which the Foundation provides certain services to or on behalf of the University.

Date issued: October 5, 1995

Rationale

To establish uses of unrestricted funds.

Policy

1. Unrestricted gift funds that are contributed to the Indiana University Foundation (IUF) may be used for the benefit of Indiana University (IU) in the following ways, with priority given in the order listed:
   1. To be made available to the President of the University to use at his discretion to meet extraordinary needs or targets of unusual opportunity of special benefit to the University. The IUF and IU agree on a budgeted amount each year that is a part of the IUF budget approved by the IUF Board of Directors.
   2. To fund the costs associated with advancing the mission of IUF, communicating to donors and ensuring that it is accountable to all its constituents.
   3. To reduce any temporary interfund borrowing in the General Fund of IUF arising as a result of funding University projects in accordance with the Reduction Plan for Interfund Borrowing approved by the Board of Directors.
   4. To support specific campaign projects and other fund raising objectives that the University has requested IUF complete.
      • Fundraising strategy as well as the attainment of dollar goals will be considered in allocating such funds.
      • The President of IUF in consultation with the President of the University will determine how to allocate any such funds that may be available.
   5. To assist with funding for stated priorities such as faculty support, library support, and student aid.
   6. To support other programs in the University related to the private fundraising efforts of IUF.
      • The IU Alumni Association and IUF often collaborate on communication and other outreach projects, which inform prospective donors of the work of the University and thereby aid in the fund- raising process.
      • In like manner, IUF works closely with the Office of University Relations and External Affairs in communication projects and programs.
   7. To augment Board designated funds which serve as the IUF unrestricted program endowment. The income from the endowment will be available to support current budgetary needs, to fund capital expenditures, or to provide a source of income to be reinvested, at the discretion of the IUF President. Additions to the IUF unrestricted program endowment will typically come from major gifts, and will require board action to designate them for this purpose.
2. Annually, the President of IUF shall report to the Board of Directors on any such use of funds, as follows:
   • Any planned uses of the funds shall be approved by the Board as part of the regular budgeting process.
   • Any discretionary use of the funds in excess of $25,000 requires prior approval of the Finance Committee.
   • Any discretionary use of the funds shall be reported annually to the Finance Committee and the Board of Directors.

Revision history

• Original version approved February 8, 1992 by the IUF Board of Directors
• Revision approved June 16, 1995 by the IUF Board of Directors

Approved

By the Finance Committee of the IUF Board of Directors on October 5, 1995

Purpose of the endowment

As stated in the Foundation's corporate charter, the function of the Indiana University Foundation (hereinafter, "Foundation") is to raise, receive, hold, administer, invest and manage funds from donors wishing to benefit Indiana University. Funds donated to the Foundation for the benefit of the University may be maintained in the form of endowments, quasi-endowments, charitable trusts or other forms deemed appropriate.

Purpose of this document

The purpose of this Investment Policy Statement (“IPS”) is to establish a clear understanding of the investment objectives and philosophy for the Pooled Long-Term Fund (“PLTF”). The PLTF is comprised of assets that are part of the Foundation intended to be invested with a long time horizon, and for which the Investment Committee, staff, and investment managers have discretionary authority.

For the avoidance of doubt, this IPS does not cover any other assets administered by the Foundation, including but not limited to the Pooled Short-Term Fund, charitable remainder trusts managed by TIAA-Kaspick, and student managed accounts.

This document will describe the standards utilized by the Investment Committee of the Foundation’s Board of Directors (“Committee”) in monitoring investment performance, as well as serve as a guideline for any investment manager retained. This document will be reviewed at least annually by the Committee.

Investment Objective

The primary investment objective of the Foundation’s asset management program is to maintain purchasing power over long periods of time. This can be attained by achieving an annualized total return (net of investment fees and expenses) equal to or greater than the rate of inflation (as measured by the average of the Consumer Price Index and the Higher Education Price Index) plus any spending (distributions to accounts) and administrative expenses.

The assets are to be managed in a manner that will meet the primary investment objective, and where possible, seek growth above the objective, while at the same time attempting to avoid excessive risks that could lead to the permanent loss of capital.

Fiduciary Duty

In seeking to attain the investment objectives set forth, the Committee shall exercise prudence and appropriate care in accordance with the Uniform Prudent Management of Institutional Funds Act (“UPMIFA”). UPMIFA is a law enacted in 49 states, including Indiana, which requires fiduciaries to apply the standard of prudence about each asset in the context of the portfolio of investments, as part of an overall investment strategy. All investment actions and decisions must be based solely on what is in the best interest of the Foundation. Fiduciaries must provide full and fair disclosure to the Committee of all material facts regarding any potential conflicts of interests. (Appendix A)

As summarized for the purpose of this Investment Policy Statement, UPMIFA states that the Committee is under a duty to the Foundation to manage the Foundation’s assets as a prudent expert would, in light of the purposes, scope, objectives and other relevant circumstances. This standard requires the exercise of reasonable care, skill, and caution while being applied to investments, not in isolation, but in the context of the portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the Foundation.

According to UPMIFA, in making and implementing investment decisions, the Committee has a duty to diversify the investments of an institutional fund unless the institution reasonably determines that, because of special circumstances, the purposes of the fund are better served without diversification. Further, the Committee may, at times, consider non-economic factors related to the institution’s mission or its current programs, while never losing sight of the preeminent goal, as fiduciaries, to do what is best to maintain the intergenerational purchasing power of the endowment.

In addition, the Committee must conform to fundamental fiduciary duties of loyalty and impartiality. This requires the Committee to act with prudence in deciding whether and how to delegate authority, in the selection and supervision of agents, and incurring costs where reasonable and appropriate.

Description of Roles

Investment Committee

The Committee is responsible for the following:

• Establishing policy and guidelines for the investment and spending policy of the PLTF financial assets
• Determining the appropriate asset allocation for the Pooled Long-Term Fund
• Monitoring the performance of assets in the PLTF
• Providing oversight and guidance to staff regarding hiring and dismissal of investment managers
• Advising the Foundation’s Board of Directors on matters pertaining to investments
• The committee may delegate authority to subcommittees or staff, including the authority to pre-approve investment decisions, providing that such decisions are ultimately presented to the full Committee

IUF Investment Office

The co-Chief Investment Officers (co-CIOs) oversee the IUF Investment Office, which has daily responsibility for administration and oversight of Foundation investments and will consult with the Committee and the investment consultant on matters relating to the investments of the Foundation. The Investment Office will serve as the primary contact for the Foundation’s investment managers, investment consultant, and asset custodian. Additional responsibilities include:

• Remaining informed about the evolving financial markets, risks, and opportunities to serve IUF most effectively in achieving its goals and objectives
• Informing the Committee on manager decisions and portfolio tilts
• Making recommendations to the Committee on matters including, but not limited to, asset allocation targets and general investment policy
• Making manager hiring and dismissal decisions
• Managing internally managed assets
• Managing internal investment staff
• Communicating investment policies and results to university personnel as required

Investment Consultant

The investment consultant is responsible for assisting the Committee and Investment Office in all aspects of managing and overseeing the investment portfolio. The consultant is an important source of investment education and investment manager information. On an ongoing basis the consultant will:

• Provide recommendations
• Supply the Committee and Investment Office with reports (e.g., asset allocation studies, investment research and education) or information as reasonably requested
• Monitor the activities of each investment manager or investment fund
• Provide the Committee and Investment Office with monthly performance reports

The Committee and IUF Investment Office have utilized the discretionary services of a specialist consultant for a specific asset class in the past and may decide to do so in the future.

Spending Policy

The Foundation spending policy is comprised of the distribution rate of 4.5% of a 12-quarter rolling average of the market value of the Pooled Long-Term Fund.

In addition, inflation bands further enhance the stability of the distributions. Distributions will be constrained to fall within 2 times inflation on the growth side and 1 times inflation on the downside based on what was distributed in the previous year.

The inflation factor will be calculated as a rolling 5-year average of the Consumer Price Index (CPI). Revised inflation bands will be computed at calendar year end and become effective the following July at the beginning of each new fiscal year.

IUF charges a 1% administrative management fee to the PLTF which is also calculated using the same methodology described above for the spending policy. This includes a 12-quarter rolling average and inflation bands.

Investment Philosophy

Investment Principles

The following core tenets provide the basis for the asset allocation policy of the PLTF:

• Equity orientation – Ownership (equity) is expected to achieve higher long-term expected returns than lending (fixed income). Equity exposure may come in the form of public equities, private equity, or ownership of real assets. The portfolio will primarily be oriented toward equity-like structures given the PLTF’s long-term focus.
• Diversification – The PLTF will seek to achieve thoughtful diversification within and between asset classes by investing in numerous funds and managers that will diversify by region, sector, and strategy.
• Willing to invest in less liquid assets – Private investments may outperform more liquid public investments by exploiting market inefficiencies. The Foundation is willing to accept illiquidity in portions of its portfolio when it believes that excess returns can be generated over the long term.
• Global mandate – The PLTF will seek to invest in the best opportunities globally. A significant portion of assets are expected to be invested in the United States but will also pursue investments in other developed and emerging market countries.

Asset Class Roles and Fund Characteristics

Global Public Equity – Publicly-traded stocks offer the opportunity to own fractional amounts of leading corporations located around the world. There are no specific targets for U.S., developed international, or emerging markets exposure, nor is there a prescription of exposure to different market capitalizations (e.g., small, mid, large). Additionally, there are no limitations placed on individual companies, sectors, or geographic exposure, as it is important to allow each manager to fully implement its model strategy portfolio.

Public equity exposure will generally be held in commingled vehicles, institutional mutual funds, or separate accounts held at our custodian. These structures generally offer liquidity ranging from one day to one month. In select situations, the PLTF may invest a portion of the public equity portfolio in partnership structures that have longer notice periods and/or a side pocket of less liquid holdings.

Global Private Equity – Over time, these strategies are expected to generate higher returns than the public markets offer and may also provide diversification benefits to the overall portfolio by giving exposure to strategies that are difficult to access in the public space. The Foundation’s private equity portfolio includes buyouts, venture capital, special situations, growth equity and other strategies as deemed appropriate.

Diversification is highly desirable within private equity across geographies, sectors, strategies, philosophies, company stage, and exposure to different economic risk factors. Also critically important is vintage year diversification, also known as time diversification. We seek to commit relatively consistent amounts each year, throughout the cycle, as some vintage years turn out to be stronger than others.

Real Assets – The objective of the Real Assets allocation is to provide low correlation to equity and fixed income markets and serve as an inflation hedge. This category may contain real estate, infrastructure, commodities, natural resources, and renewable energy. While this exposure may come in the form of public market funds, we expect that most of this allocation will be invested in private equity structures. Thus, it is important to achieve vintage year diversification in real assets, as described in the private equity section above. It is also desirable to diversify by asset type, strategy, sector, and fund manager.

Absolute Return – This part of the portfolio seeks to provide returns with low correlations to the equity and fixed income markets by seeking specialist managers able to generate returns through unconstrained investment management, opportunistic investing, and the ability to control market exposure through hedging. Funds in this part of the portfolio may be focused on arbitrage, credit, long/short equity, global macro, distressed, and open mandate funds that combine numerous underlying strategies. While over time most of these funds will be in semi-liquid partnership structures, we maintain the ability to invest in drawdown funds in situations where the assets are more appropriately held in those structures. These strategies could involve rescue capital, royalties, or other unique sources of absolute return.

Fixed Income – Our fixed income allocation serves a critically important role within the portfolio. It provides a liquid and reliable source of funds for cash needs, including our distributions to the University, the fees that help to fund IUF’s ongoing operations, private equity capital calls, and the potential for withdrawals from quasi-endowments. The PLTF may also selectively invest in private credit funds that are housed within our fixed income allocation.

Asset Allocation

Asset allocation will likely be a key determinant of the Foundation’s returns over the long-term. Therefore, diversification of investments across multiple markets that are not similarly affected by economic or political developments is highly desirable. A globally diversified portfolio, with uncorrelated returns from various assets, should reduce the variability of returns across time. In determining the appropriate asset allocation, the inclusion or exclusion of asset categories shall be based on the impact to the total portfolio, rather than judging asset categories on a standalone basis.

The target asset allocation should provide an expected total return equal to or greater than the primary objective of the Foundation, while avoiding undue risk concentrations in any single asset class or category, thus reducing risk at the overall portfolio level. To achieve these goals, the Pooled Long-Term Fund asset allocation will be set with the following target percentages and within the following ranges:

^[1]Limited Partners (investors) in private investment vehicles are not in control of the timing of cash flows or valuation markups or markdowns. Thus, it is conceivable that the actual allocation ould fall outside of these ranges for a period. This could occur because of significant exit activity reducing our allocation below the lower-bound of the range, or markups that outpace the returns generated in other parts of the portfolio. This latter dynamic can be exacerbated by the ‘denominator effect’ if public markets experience a sharp decline concurrent with private funds holding up, even if only temporarily due to the lagged effect of valuations.

In these circumstances, there are often limited potential near-term remedies that are economically attractive, as private capital exposure takes years to scale in and out of. Following a period of strong exits, it may be unattractive to quickly rebuild exposure through secondary purchases or increasing commitments. Conversely, in times of market stress, selling prices for secondary stakes may be heavily discounted and an unattractive method of rebalancing.

If any asset categories fall outside of the range, the Investment Office shall notify the Investment Committee chair as soon as practicable.

Rebalancing

Periodic rebalancing of the portfolio toward policy targets has proven to be an effective portfolio management tool. It is useful for maintaining the risk profile adopted by the Committee and for achieving the desired goals and objectives. The asset allocation of the endowment relative to the established policy targets and ranges will be monitored on a regular basis by the Investment Office and adjusted as required and/or as it is deemed beneficial to do so. In many cases, the
additions of new money or withdrawals for spending will be used to rebalance in a cost-effective manner. There will be times, due to sharp price fluctuations of the financial markets or manager performance, in which cash flows may not be sufficient to maintain the actual allocation within permissible ranges. In those cases, it will be necessary to reallocate assets to comply with allocation guidelines.

As discussed above, private investments can cause rebalancing challenges in certain market conditions, given the fact that investors do not control the timing of capital calls, distributions, or valuation changes. In those circumstances, it may be necessary to carry offsetting overweights or underweights in other asset classes.

Tactical/Opportunistic

The Committee appreciates, especially during increased volatility within the financial markets, the benefits of allowing for the limited consideration and possible investment in opportunities that may require a nimbleness and added degree of flexibility not normally available in the management of the endowment portfolio. Such an allocation may be used for market anomalies, price dislocations, portfolio tilts, or time-sensitive opportunities, for example.

ESG Considerations

Environmental, Social, and Governance (“ESG”) factors are given consideration within our due diligence process within all asset classes. Often, these manifest as risk factors to be considered. When underlying assets or companies need improvement in areas of ESG, we like to see our investment managers engage in efforts to find solutions and improvements, rather than mandating a sale or prohibition of owning a given company.

Liquidity

A goal of the Foundation is to maintain a balance between investment goals and liquidity needs. Liquidity is necessary to meet the spending policy payout requirements (distributions to accounts), private investment capital calls, and any extraordinary events. The Committee understands that in many instances, the most appropriate investment option is one that comes with liquidity constraints. The tradeoff between appropriateness and liquidity will be considered
throughout the portfolio construction process.

Capacity

As indicated in the Pooled Short-Term Fund IPS, the Pooled Long-Term Fund can borrow the lesser of $75 million or 15% of the PSTF value as a source of temporary liquidity if warranted by market conditions. This shall be paid back as soon as practicable and is not intended to be used as a long-term source of portfolio leverage.

The Investment Office receives regular reports from the IUF Portfolio Accounting team regarding our current cash balance. Upon notification that the cash balance has gone negative (which automatically triggers PSTF borrowing), if the Investment Office intends to maintain a negative cash position for more than one week, it shall consult with the
Investment Committee Chair for approval and subsequently notify the full Investment Committee.

Evaluation and Performance Measurement

Benchmark

The goal is for the portfolio to outperform its benchmarks over full market cycles with the knowledge that all investment objectives will not be attained in each year. Furthermore, the Committee and staff recognize that over various time periods, the portfolio may produce significant deviations relative to the benchmarks. For this reason, investment returns will be evaluated over a full market cycle (for measurement purposes: 10 years).

The primary objective of the Foundation is to achieve a total return, net of fees, equal to or greater than spending (distributions to accounts), administrative fees, and inflation. The primary objective of the PLTF is:

Return > Inflation + Spending Policy + Administrative Fees (Inflation + 5.50%)

A secondary objective is to achieve a total return greater than the Target Weighted Index comprised of each asset category benchmark weighted by its target allocation. The Target Weighted Index will be adjusted periodically to match the actual allocation due to the long period needed to draw down capital and realize value from private investments. Currently, the Target Weighted Index is comprised of:

Target Weighted Index 07/01/25 - Present
35% MSCI ACWI (Net) – Public Comp
33% MSCI ACWI (Net) – Private Equity Comp
10% HFRI Fund of Funds Index
9% FTSE NAREIT All Equity REITs Index
3% S&P NA Natural Resources Index
10% Bloomberg Barclays Aggregate Bond Index

Manager Evaluation

It is expected that equity, fixed income, and absolute return managers outperform the benchmarks over a reasonable timeframe (for measurement purposes: 5-10 years). The Committee and staff do not expect that all investment objectives will be attained in each year and recognize that over various time periods, including multi-year stretches, investment managers may significantly underperform their benchmarks. Each equity, fixed income, and absolute return investment manager will be reviewed on an ongoing basis and evaluated based upon the following criteria:

• Stability of the organization
• Retention of key personnel
• Absence of regulatory actions against the firm, its principals, or employees
• Adherence to the guidelines and objectives of this Investment Policy Statement
• Consistency in the style and capitalization characteristics defined as “normal” for the manager
• Performance compared to the appropriate benchmark and, for equity managers, produce positive risk-adjusted return (alpha)
• Performance compared to a peer group of managers with similar styles of investing. Due to poor performance or certain other factors occurring within a firm, managers may deserve additional attention and would be added to the IUF Watch List (Appendix B).

Although there are no strict guidelines that will be utilized in selecting managers, the criteria above as well as the length of time the firm has been in existence, its track record, assets under management, and the amount of assets the Foundation already has invested with the firm will be evaluated.

Summary of Quantitative Performance and Risk Objectives

Liquid and Semi-Liquid Active Managers

Public equity, fixed income, absolute return, and public real asset managers will undergo extensive qualitative and quantitative analysis on an ongoing basis and throughout the full market cycle to gauge whether they are executing on their stated strategy and delivering value to the overall portfolio.

Qualitative review will focus on firm ownership structure, personnel changes, adherence to stated strategy, exposure to potential headline risks, proliferation of strategies at the firm, and a host of other factors. Quantitative analytics will vary by asset class, but will look at portfolio characteristics, assets under management, risk and volatility metrics, style analysis, return attribution, portfolio concentration, performance versus benchmark, and performance within peer group. It is critically important to apply qualitative reasoning to the quantitative work to understand why a fund performed the way it did in each period of time.

Importantly, a primary consideration is the performance of the overall portfolio and how it fits together to achieve IUF’s investment objectives. A manager may underperform over a stretch of time but provide valuable diversification benefits to the overall portfolio when market dynamics rapidly shift.

Public Liquid Passive Managers

Passive (index) managers are expected to approximate the total return of the respective benchmark. The beta for passive equity managers should approximate 1.00.

Private Illiquid Managers

Most of the Foundation’s private equity and real assets allocation will be invested with private partnerships. These partnerships typically range from 7-12 years in life, during which time the Foundation may not be able to sell the investment. Additionally, the partnership may not produce meaningful returns for 3-7 years (depending on the strategy). New investments are generally expected to create a drag on Foundation performance in the early years (3-5 years)
until these investments begin to mature. Private, illiquid manager performance will be measured utilizing internal rate of return (IRR) calculations, measuring the multiple of invested capital (MOIC), distributed to paid-in capital (DPI), and compared to an appropriate peer group within the respective vintage years. As with public and absolute return fund managers, qualitative factors are equally important as quantitative ones, and portfolio context is critical. It is not realistic to expect a private capital manager to outperform in all vintage years and market environments.

Guidelines & Restrictions

Overview

The requirements stated below apply to investments in separate, discretionary accounts on behalf of the Foundation.

Although IUF cannot dictate policy to commingled fund investment managers, IUF’s intent is to select and retain only commingled funds with policies that are similar to this Investment Policy Statement. All managers (commingled and separate), however, are expected to achieve the performance objectives. Each traditional equity and fixed income investment manager shall:

• Have full investment discretion regarding security selection consistent with this Investment Policy Statement.
• Immediately notify the Investment Office and consultant of any material changes in the investment philosophy, strategy, portfolio structure, ownership, or senior personnel.
• Vote proxies and share tenders in a manner that is in the best interest of the Foundation and consistent with the investment objectives contained herein.

Illiquid and Semi-Liquid Investment Guideline

Each investment will require a signed Subscription Agreement and Limited Partnership Agreement. The Foundation may wish to have these documents reviewed by independent legal counsel. As these investments are typically private limited partnerships, the Foundation cannot dictate policy. The Foundation may, however, request side letters for revisions or addendums to the Limited Partnership Agreement. The manager is ultimately responsible to manage investments in accordance with the Private Placement Agreement (PPM) and Limited Partnership Agreement.

The Foundation is a tax-exempt organization, but certain investments may be subject to taxation on Unrelated Business Taxable Income (UBTI). Given that net risk-adjusted returns are the primary objective of the Foundation, potential tax ramifications must be considered during the investment analysis and selection process. The Foundation may seek to minimize the UBTI impact on the portfolio by selecting investment structures and geographic locations most beneficial to the Foundation.

Abusive Tax Shelters and Listed Transactions

The Internal Revenue Service has identified specific listed transactions considered to be abusive and requires individuals that market and participate in these transactions to disclose said activity. A listed transaction is a transaction that is the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax avoidance transaction and identified by notice, regulation, or other form of published guidance as a listed transaction.

The Indiana University Foundation will comply with the form, substance, spirit, and letter of such laws and regulations. As agents of the Foundation contracted to perform specific investment management activities, each investment manager is prohibited from marketing to, or otherwise engaging the Foundation in these listed transactions. Should any of the investment vehicles currently held for the benefit of the Foundation be classified by the IRS as an abusive tax shelter subsequent to the original engagement, each manager is required to notify their Foundation contact immediately and make every effort to divest of this transaction. Such notification should include a detailed listing of any investment transactions or activities performed on the Indiana University Foundation’s behalf and the plan to divest these investments.

Derivative Security Guideline

Many investment managers will utilize derivatives in the normal course of business to efficiently create exposure, hedge against risk, or achieve desired portfolio characteristics. The utilization of derivatives will vary by asset class and strategy, and due diligence should incorporate a comprehensive understanding of how and why the manager is using these instruments.

In the case of commingled vehicles, including absolute return and private equity funds, if an investor is uncomfortable with how derivatives are being used and/or explained by the manager, the best option is to pass on the fund if not yet invested. Redemptions are also an option if necessary with existing absolute return funds. In the case of separate accounts held at our primary custodian bank, IUF will evaluate the manager’s standard use of derivatives and decide whether to limit or prohibit the use of derivatives in our specific customized account.

APPENDIX A

Conflict of Interest Policy

(In conjunction with existing IUF policy)

Below are guidelines for evaluating investments for the Foundation that may have a perceived or real conflict of interest involving an IUF Board Member, family member of an IUF Board Member, or individuals in a position of influence including IU trustees and major donors. These guidelines serve as a first set of hurdles to clear before a potentially conflicted investment opportunity would be considered via the full due diligence process.

• No first-time funds excluding those in an evergreen format that meet the criteria below
• Minimum of 3 years in business
• The Firm must have at least $100 million in invested/committed capital
• The manager must have demonstrated top quartile performance in previous/existing investments relative to an appropriate peer group. It is recognized that private equity peer measurement becomes more meaningful as the period is lengthened, therefore the age of the funds must be factored into the judgment so that this is not the sole criteria for exclusion.
• IUF’s investment may be no more than 10% of the total fund size

If an investment passes the initial screen, passes subsequent due diligence by Staff, and advances to final stages of consideration:

• The interested party must fully disclose any potential conflicts and completely recuse himself/herself from the discussion of the potential investment.
• The process must be well documented that all appropriate steps have been taken to prove that conflicts of interest were minimized.

APPENDIX B

Investment Manager Watch List Policy

In building a portfolio under the asset allocation guidelines as established by the Indiana University Foundation (IUF) Investment Committee, the investment assets are primarily managed through the utilization of external investment managers and funds. The oversight of the managers is the responsibility of the IUF Investment Office with assistance from the investment consultant.

IUF desires to hire and retain investment managers that offer, in aggregate, the most attractive attributes and abilities to enable IUF to achieve its goals and objectives, and to avoid or terminate managers who are unlikely to achieve performance objectives on a going-forward basis. IUF recognizes that past performance may not be indicative of future results, and that over a long-term time horizon even the most successful managers are likely to experience periods of lackluster or poor performance. IUF also recognizes that there are costs to changing managers (in terms of time and resources to conduct a search, and the actual transaction costs to transition from the old portfolio to the new, and potential disruption of market exposures), and desires to achieve its performance objectives with the lowest possible manager turnover.

This policy describes the ongoing manager monitoring to be performed by staff and the consultant and outlines the criteria that will trigger a manager’s addition to the Watch List.

This policy applies to all external managers unless otherwise noted.

Criteria Triggering Addition to Watch List

The following factors have been developed to assist staff when considering whether an external investment manager necessitates extra scrutiny, initially with an addition to the Watch List, and potentially with termination. There are two sets of factors to consider, qualitative and quantitative. Due diligence is a comprehensive and ongoing process with more factors to monitor than can be summarized in a policy statement. The following list is not intended to be exhaustive, and numerous other factors can land a manager on the Watch List.

Qualitative Factors – These relate to the overall investment organization, investment philosophy and process.

• Process - Has the manager deviated from the process or philosophy for which it was hired?
• Ownership – Has the manager undergone ownership or substantial organizational changes in the past three years?
• Personnel – Have key members of the portfolio management team left the firm, had a significant change of roles, or undertaken significant new responsibility?
• Regulatory/ Legal – Has the manager faced legal action or had a regulatory change that could impact the firm?

Quantitative Factors – These are basic risk and return measures derived from the manager’s investment performance.

• Assets Under Management – Has the manager experienced inflows/outflows within the portfolio that have the potential to impact results?
• Performance – For public equity and fixed income managers, has the manager underperformed its benchmark over the trailing five-year period? For absolute return, real asset, and private capital managers, underperformance relative to expectations and/or vintage group peers can trigger addition to the Watch List.

Manager Review Process and Outcomes

Within a reasonable time after the conclusion of each calendar year, the investment consultant will prepare a grid indicating whether each traditional (public equity and fixed income) manager has passed or failed each of the above criteria. For any manager that has failed one or more criteria, staff and the consultant shall conduct a review appropriate in scope to the criteria triggered. At the conclusion of the review, staff shall determine whether to retain the manager.

APPENDIX C

Private Co-Investments

The return objective of private co-investments is similar to that of the underlying illiquid private investment strategy. The purpose of utilizing the co-investment structure is to increase the PLTF’s exposure to top quality managers and lower the cost of private investment fees. Starting in 2022, new co-investments may only be made alongside existing General Partners whom IUF is already invested or committed. This should alleviate issues with determining a fair valuation to hold the investments at and should provide strong information rights about the deal.

• The annual amount of capital deployed in co-investments shall not exceed 1% of the Foundation’s Pooled Long-Term Fund during any given calendar year. The cumulative cost basis of active, unrealized co-investment deals shall not exceed 5% of the PLTF.
• Individual co-investments including future rounds of funding will be limited to acumulative cost basis of 25 basis points of the Foundation’s Pooled Long-Term Fund. In the case of a continuation vehicle co-investment (where an existing position is rolled over rather than taking a cash exit), the limit of 25 basis points applies to the original cost basis of the position, not the amount rolled into the new vehicle. Investing more than 25 basis points will require Investment Committee approval.
• The Investment Office must perform reasonable due diligence in advance of closing. Co-investments will follow a similar process as fund investments, including the Investment Office making the final decision and subsequently presenting the decision to the Committee. Given the time constraints inherent in many co-investment situations, it may not always be feasible to include these on the Committee pipeline reports.
• Co-investments must have a reasonable time to liquidation. Opportunities with investment horizons that are expected to be greater than ten years should not be considered.
• For co-investments in private entities without a publicly attained valuation, staff will use the valuation that the “sponsor” General Partner uses in its valuations. If a co-investment becomes publicly traded, the public valuation will be used. In the absence of a General Partner valuation, staff would rely upon the “Price of Recent Investment” valuation technique as outlined in the International Private Equity and Venture Capital Valuation Guidelines as follows: the Valuer uses the initial cost of the Investment itself, excluding transaction costs, or, where there has been subsequent investment, the price at which a significant amount of new investment into the company was made, to estimate the Enterprise Value.
  • If neither valuation technique is available nor satisfactory, any discretionary valuation changes will be made only with the approval of the Committee.
• The Investment Office shall provide regular monitoring of co-investments, as it does with fund investments.

Date issued: June 15, 2007

Last Updated: December 2025

Scope

The following policy applies to all Indiana University Foundation, Inc. (the “IUF”) individuals serving on the IUF Board of Directors (the “IUF Board”), officers, employees, volunteers, and agents (collectively, “IUF Representatives”).

Purpose

IUF is an institution of trust whose policies require that all IUF Representatives conduct themselves in accordance with the highest legal, ethical, and moral standards. Conflicts of interest should be avoided where possible, or otherwise disclosed and managed. This policy outlines the obligations of IUF Representatives to ensure that both real and perceived conflicts of interest are appropriately identified and disclosed.

Policy

• Code of Ethics - All IUF Representatives should conduct themselves and IUF operations in a manner which merits continued public trust and confidence.

  • Loyalty to Mission - The IUF has a clearly-stated mission and purpose, approved by the IUF Board. All of its programs support that mission and all who work for or on behalf of the IUF understand and are loyal to that mission and purpose. The mission is responsive to the constituency and communities served by the IUF.

  • Governance - The IUF has an active board that is responsible for setting the mission and strategic direction of the organization and for oversight of the finances, operations, and policies of the organization. The IUF Board:

    • Ensures that directors serving on the IUF Board (the “Directors”) have the requisite skills and experience to carry out their duties and that all members understand and fulfill their governance duties acting for the benefit of the organization and its public purpose;
    • Has a conflict of interest policy that ensures that any conflicts of interest or the appearance thereof are avoided or appropriately managed through disclosure, recusal, or other means;
    • Ensures that the organization conducts all transactions and dealings with integrity and honesty; and
    • Ensures that the resources of the organization are responsibly and prudently managed.
  • Duty of Responsible Stewardship - IUF Representatives have an affirmative duty to ensure that IUF resources are managed responsibly and prudently.
  • Duty of Confidentiality
    1. IUF Representatives are required to maintain strict confidentiality regarding all information that is not generally known to the public and that is shared during the course of their service. This includes, but is not limited to:
       • IUF Board deliberations and executive sessions; and
       • IUF confidential data, including, but not limited to proprietary, business, financial, donor, and employee information.
    2. This duty of confidentiality survives the term of the IUF’s Representative’s service to IUF.
    3. Confidential information shall not be disclosed to any outside party nor to other IUF Representatives who do not have a specific, authorized need to know.
  • Representing IUF - Unless specifically designated and authorized by the IUF Board or through IUF policy, no Director, employee, agent, volunteer, or other IUF Representative may speak publicly or officially on behalf of the IUF.
  • Engagement and Belonging - The IUF has a policy of promoting engagement and belonging and prioritizing that its employees and volunteers should reflect diverse backgrounds and experiences in order to enrich its programmatic effectiveness. The IUF takes meaningful steps to promote engagement and belonging in its hiring, retention, promotion, board recruitment, and constituencies served.
• Conflicts of Interest & Conflicts of Commitment - All decisions of IUF Representatives shall be made impartially and solely in the best interests of IUF. IUF Representatives may have relationships and affiliations that raise questions about real or perceived conflicts of interest. Although many such potential conflicts are and will be deemed inconsequential, every IUF Representative has the duty to ensure that IUF is made aware of situations that involve external personal, familial, or business relationships that could create a real or perceived conflict of interest. For that reason, the IUF Board requires each IUF Representative to:
  • Be familiar with the terms of this policy;
  • Disclose any possible personal, familial, or business relationships that reasonably might give rise to a conflict or an appearance of conflict involving the IUF; and
  • Acknowledge that they are in compliance with the letter and spirit of this policy.
  • IUF Board of Directors: A conflict of interest arises for a Director of the IUF Board when the Director’s duties to the IUF conflict with a duty to another organization or overlap with a competing personal interest that the Director may have with regard to a proposed transaction.
  • Employees, Officers, and Agents:
    1. Conflicts of Interest
       • Personal Gain or Personal Relationships: A conflict also arises when an employee, officer, or agent who is in a position to exert influence over financial decisions of IUF could gain personally as a result of procuring or providing goods or services on behalf of the IUF, or when personal relationships have the potential to influence their objective judgment in performing IUF work or making decisions related to their IUF employment.
       • Gifts and Gratuities: Employees, officers, volunteers, and agents shall use sound judgment when accepting any gift, gratuity, or benefit from any external source (including, but not limited to, donors, vendors, and Board Directors) in the course of IUF business.
         • The acceptance of the following gifts, gratuities, or benefits are acceptable and do not need to be disclosed:
           • Items of de minimus value, defined as $100 or below; and
           • Conference registration waivers where IUF benefits from the employee’s attendance at the conference or where the employee is a speaker, moderator, or other participant; and
           • Meals, beverages, and entertainment as part of IUF business or in conjunction with attendance at a conference, convention, or similar event; and
           • Consumables, such as cakes and pies.
         • Any gift with a fair market value exceeding $100, and that does not fall within one of the above exceptions, must be disclosed in writing to the employee’s supervisor and to the IUF Internal Auditor pursuant to Section III of this policy. After the disclosure is made, the IUF Internal Auditor, along with the other IUF authorities listed in Section III, shall determine whether the employee may accept the gift, whether the gift shall become property of IUF, or whether some other resolution is warranted.
         • Employees shall be limited to an annual cap of $100 on all gifts. Once this cap is reached, the employee must decline all subsequent gifts unless any subsequent gifts are determined to be charitable gifts to IUF, and not personal gifts to the individual employee.
         • All disclosures under this Section B(1)(b) shall be maintained in the employee’s personnel file.
    2. Conflict of Commitment: A conflict of commitment arises for an employee when private, outside commitments (e.g. other jobs, volunteer engagements, side ventures including an active or inactive business [both incorporated and unincorporated]) may interfere with that person’s ability to fulfill their IUF responsibilities, whether due to time spent on the outside commitment to the detriment of IUF, or because the outside commitment involves work that overlaps with IUF’s work and could affect the employee’s ability to first and foremost protect IUF confidential or proprietary information and/or processes. External activities not related to IUF responsibilities should take place outside of the employee’s designated hours or required work activities, or during periods of authorized leave.
• Disclosure of Conflicts of Interest and Conflicts of Commitment
  • Disclosing a Conflict - In the event an IUF-related transaction, whether financial or operational, involves an IUF Representative, a member of their extended family, or an organization in which the IUF Representative has any material financial interest, the IUF Representative having the affiliation or interest, at the first knowledge of the transaction, shall disclose fully the precise nature of the interest or involvement. A Director, officer, agent, volunteer, or employee is deemed to be affiliated with any organization of which they or a member of their family, is a director, officer, trustee, partner, employee, or agent, or in which they or a member of their family receives direct financial benefit from sales or services, or in which they or members of their extended family have a 35% or greater interest.
    • Directors and Officers shall direct all disclosures in writing to the Chair of the Audit Committee of the IUF Board. The Chair of the Audit Committee, along with the IUF Internal Auditor, shall be responsible for any other issues under this policy concerning Directors of officers.
    • Employees and Agents shall direct all disclosures, real or perceived, in writing via the conflict of interest form provided in Dayforce. The Internal Auditor shall consult with the SVP, Human Resources & Culture, the VP for Strategic Initiatives and Board Engagement, and the General Counsel regarding all employee disclosures. Where an employee has disclosed and/or has been found to have a conflict of interest in any proposed transaction or other matter, the employee shall refrain from participating in deliberations or decisions related to the proposed transaction or other matter. When appropriate, the IUF President, or, where applicable, the Chair of the Audit Committee, shall be consulted to determine whether action is necessary to assure that the transaction or activity is completed in the best interests of the IUF without the substantive involvement of the person who has the conflict. Where an employee has disclosed a potential conflict of commitment, the Internal Auditor, SVP Human Resources, the VP for Strategic Initiatives and Board Engagement, and General Counsel shall consult with the employee’s supervisor to determine the extent to which the activity poses a significant conflict of commitment and, if it does, whether parameters must be set for the employee’s involvement in the activity, or other action must be taken.
  • Disclosure Statements - Each IUF Board Director shall be required to submit an annual disclosure statement listing all organizations or activities with which they are affiliated and describing the nature of the affiliation. All other IUF Representatives, including employees, shall submit, at a minimum, biennial disclosure statements. In the event there is any material change in the information contained in any disclosure statement, the person who submitted it shall promptly submit written notification of the change to the Internal Auditor in the manner described above.
  • Confidentiality - Information disclosed under this policy shall be held in confidence by the persons authorized to receive and act upon it, except where, in the judgment of any of such persons, the best interest of the IUF requires further disclosure. The Internal Auditor shall provide a report on all disclosures received from Directors and the process for addressing them annually to the IUF Audit Committee.
• Additional Requirements for IUF Board of Directors
  • Restraint on Participation for Directors and Officers - A Director or officer who has declared, or has been found to have, a conflict of interest in any proposed transaction or other matter shall refrain from participating in deliberations related to the proposed transaction or other matter, unless for special reasons the IUF Board requests information or interpretation from the conflicted Director or officer. A Director, or an officer with voting privileges, who has a conflict with regard to a transaction or other matter shall not vote on the transaction or matter in question and shall not be present at the time of the vote.
    In order to comply with IRC Section 4958, and to establish a rebuttable presumption of reasonableness of compensation, the IUF Board-authorized committee charged with approving the total compensation for disqualified personnel (the IUF Compensation Committee) must be comprised entirely of individuals who do not have a conflict of interest. The requirements to disclose a conflict of interest and refrain from participation apply on a transaction-by-transaction basis.
  • Independence of Directors - IRS regulations and best practices dictate that IUF must determine whether each Director is “independent.” Being classified as independent or not independent has certain consequences for the Director’s participation in IUF Board committees and activities. A Director is independent unless the Director, or a living family member of the Director:
    • is an employee of the IUF, Inc.; or is an employee, officer, or trustee of Indiana University; or is an employee, officer, director, or trustee of any of the component units (other than the IUF), as defined by GASB 39, of Indiana University, or
    • is an independent contractor who earns more than $10,000 in any year from Indiana University, or any of its component units, or
    • directly or constructively owns a significant (5% or more) financial interest in, or is a director, officer, partner, or trustee of, any service provider or major supplier (purchases valued at $10,000 or more in any year) to Indiana University, or any of its component units.
  • A Director shall be considered not independent due to a living family member’s status as an employee under Section B(1) above only if such status includes significant management responsibility, i.e., if the family member regularly exercises general authority to make administrative or policy decisions for the organization.
  • A Director who is not independent may not serve as a member of the Audit Committee or Compensation Committee. In addition, under certain circumstances, such a Director may be considered to have a conflict of interest with regard to a particular transaction or matter and must comply with the relevant disclosure and participation restrictions noted in this policy.
  • Director Eligibility - A Director may be classified as independent under the definition set forth above; however, if the Director is an employee with significant authority at a service provider or major supplier to Indiana University or any of its component units as defined by GASB 39, the IUF Board may, nonetheless, wish to classify such Director as ineligible to serve on the Audit Committee and the Compensation Committee.
  • Advance Determinations - Any Director or officer who is uncertain about a possible conflict of interest or their independence in any matter may request the Audit Committee to determine whether a possible conflict or lack of independence exists, or in the case of employees, the Internal Auditor, General Counsel, the VP for Strategic Initiatives and Board Engagement, and/or SVP, Human Resources & Culture. If referred to the Audit Committee, the question shall be resolved by majority vote and may be forwarded to the Executive Committee for further review. If advisable, the question of potential conflict might be referred to the General Counsel for an opinion prior to review by any committee.
• Other
  • Nothing in this policy shall be construed to permit any activity that is prohibited by law, even if an actual or potential conflict of interest has been disclosed.
  • Nothing in this policy shall be construed in such a way as to conflict with other reporting obligations or protections provided under state or federal law.
  • Nothing in this policy is intended to restrict communications or actions protected or required by state or federal law.

Communication of Policy

The Internal Audit Department shall be responsible for the communication of this policy. In addition to any other communication methods the Department deems necessary, this policy, and any associated procedures, shall be posted on the IUF intranet and separately communicated to IUF Department Heads, as appropriate.

Definitions

IUF Representative: All IUF Board Directors, officers, employees, volunteers, and agents of IUF.

Related Party Transaction: A business deal or arrangement between two parties who have a pre-existing business relationship.

Rebuttable Presumption of Reasonableness: with respect to the compensation package refers to the following: the presumption that the "consideration", i.e., the compensation, property, transfer of property, or any other benefit or privilege that the tax-exempt organization provides to the disqualified person in exchange for his/her performance of services, is not an excess benefit and is reasonable.

Extended Family: shall be deemed to include an individual’s spouse, children (including legally adopted children), parents, grandparents, great grandparents, siblings (whether by whole or half blood), spouse of that individual’s siblings, children, grandchildren and great grandchildren and members of that individual’s household.

Employee with Significant Authority: the definition of employee with significant authority mirrors that of an organization manager as described in U.S. Code Title 26, Subtitle D, Chapter 42, Subchapter D, Section 4958 and means, with respect to the service provider or supplier, any individual having powers or responsibilities similar to those of officers, directors, or trustees of the organization.

Make a confidential report

Date issued: April 18, 2007

Last Updated: January 2024

Scope

This policy applies to all members of the Indiana University Foundation, Inc. (“IUF”) community, including:

• All IUF employees;
• All IUF volunteers, including the IUF Board of Directors;
• All IUF vendors, contractors, and other parties with whom IUF has a businessrelationship; and
• All IUF donors and prospects.

This policy applies to all interactions, whether they occur on IUF premises, at off-siteevents, online, or in any programs or activities of IUF as defined within IUF’s Anti-Discrimination and Anti-Harassment Policy.

Employees of Indiana University should follow IU’s Whistleblower Protection Policy.

Purpose

The IUF’s Code of Ethics states that individuals are expected to abide by state and federal laws and regulations as well as IUF policies. For this reason, an IUF employee cannot be compelled by a supervisor, IUF official, or IUF employee to violate a law, regulation, or IUF policy. The interests of the IUF are served when individuals who have knowledge of specific acts which the individual reasonably believes violate a law, regulation, or IUF policy discloses those acts to an appropriate IUF official.

The purpose of this policy is to:

• Foster an atmosphere that encourages individuals to disclose violations of lawand IUF policies;
• Inform individuals how allegations of wrongful conduct may be reported;
• Protect individuals from retaliation; and
• Provide individuals who believe they have been subject to retaliation forreporting alleged wrongful conduct with a means of seeking relief.

Policy

• Protection for Employees Who Make Good-Faith Reports

Individuals who make a good-faith report of suspected wrongful conduct shall be protected by IUF. This protection includes protection from retaliation, including discharge, reassignment, demotion, suspension, harassment, or any other adverse employment action. This policy supplements, but does not replace or supersede, applicable federal and state law.

• Reporting

Suspected violations of law, regulations, or IUF policy should be reported immediately. Employees are encouraged to report any suspected wrongful conduct to their supervisor but reports of suspected wrongful conduct can also be made via the IUF’s EthicsPoint web tool or by calling the EthicsPoint hotline at: 855-351-5661.

An individual making a good-faith report of suspected wrongful conduct may choose to remain anonymous while making a report or while interacting with the IRT during an investigation of the report. Please see Section IV below for more information on anonymity.

Individuals may choose to make reports directly to a member of the Incident Response Team (IRT). If the complaint involves a member of the IRT, then the report should be made to the Chair of the Audit Committee of the IUF Board of Directors. Individuals should make a reasonable attempt to ensure that any information they provide is accurate.

If they feel comfortable doing so and if it is safe, employees or other affected individuals should respond to any individual engaging in discriminatory or harassing conduct with a clear indication that the individual’s behavior is unwelcome. However, this is not a requirement and employees are not required to complain directly to the individual engaging in the discriminatory or harassing behavior.

Any individual making a report of suspected wrongful conduct shall make the report in good faith, as defined herein. An individual who knowingly furnishes false information may be subject to disciplinary actions, including suspension or termination.

• Retaliation Prohibited

Retaliation against anyone who has made a good faith report of wrongful conduct, provided information, or participated in an investigation into a good faith report of wrongful conduct is strictly prohibited and may be considered a potential violation of this policy and/or other applicable IUF policies. Any person found to have engaged in retaliation will face disciplinary action up to, and including, termination from IUF.

Individuals who believe they have been subjected to an adverse action either because they made a good-faith report of suspected wrongful conduct or participated in the investigation of a good faith report of alleged wrongful conduct may contest the action by filing a written complaint with Executive Vice President and General Counsel or the Senior Vice President for Human Resources & Culture.

• Anonymity

An individual making a good-faith report of suspected wrongful conduct may choose to remain anonymous while making a report or while interacting with the IRT during an investigation of the report. The IUF respects and protects the identity of an individual who chooses to make an anonymous report in good faith and will do so to the extent possible within the limitations of law and policy and the need to conduct a competent investigation. Individuals should be cautioned that their identity may become known for reasons outside of the control of the investigators or IUF management. Similarly, the identity of investigation subjects and investigation participants will be maintained in confidence with the same limitations.

The EthicsPoint hotline is administered by Navex Global, an independent third party. Navex Global is responsible for the maintenance of the EthicsPoint website and the tollfree number. Navex Global ensures the anonymity of Whistleblowers making reports through EthicsPoint if requested.

It is worth noting that the Incident Response Team will make every endeavor possible to investigate all reports, but in some cases there are limitations to what can be achieved if the individual making the report chooses to remain anonymous.

• Investigations

Once an individual has initiated a report under this policy, the IRT is responsible for the investigation of that report pursuant to the IUF Incident Response Policy; provided, however, that the IUF retains the prerogative to determine when circumstances warrant an investigation and, in conformity with this policy and applicable laws and regulations, the appropriate investigative process to be employed. Investigations will be launched only after preliminary consideration that establishes that the allegation, if true, constitutes wrongful conduct, and the allegation is accompanied by information specific enough to be investigated or directly points to corroborating evidence that can be pursued. Such evidence may be testamentary or documentary.

• Other

  • Nothing in this policy is intended to interfere with bona fide employment and operational decisions.
  • Nothing in this policy shall be construed in such a way as to conflict with otherreporting obligations or protections provided under state or federal law.
  • Nothing in this policy is intended to restrict communications or actions protected orrequired by state or federal law.

Communication of Policy

The Internal Audit Department shall be responsible for the communication of this policy. In addition to any other communication methods the Department deems necessary, this policy, and any associated procedures, shall be posted on the IUF intranet and separately communicated to IUF Department Heads, as appropriate.

Definitions

Wrongful Conduct: A violation of applicable state and/or federal laws and regulations; a serious violation of IUF policy; willful failure to perform duties, or the use of IUF property, resources, or authority for personal gain or another purpose that does not promote the IUF’s interests.

Retaliation: Acts of retaliation include intimidation, threats, and/or harassment, whether physical or communicated verbally or via written communication (including the use of e-mail, texts, and social media), as well as adverse changes in work environments, or other adverse actions or threats.

Good Faith Report: An allegation of wrongful conduct made by an individual who believes that wrongful conduct may have occurred. An allegation is not in good faith if it is made with reckless disregard for, or willful ignorance of, facts that would disprove the allegation.