Frequently Asked Questions

We welcome the opportunity to respond to your inquiries about the types of services available. Listed below are some of the most frequently asked questions. If your questions are not answered after reviewing our website, please do not hesitate to contact us.

What is the history of HighGround?

Established in 1930 as an integrated auxiliary of the Baptist General Convention of Texas, our organization was founded to manage the endowment assets of Texas Baptist churches and institutions. Since its establishment, HighGround has grown and now manages assets for various nonprofit organizations, not just those that are Baptist affiliated. Our core values, which are the heart of HighGround, embrace our Christian heritage and guide us as we work with nonprofit clients who are transforming lives.

Why should I partner with HighGround?

Partner with HighGround to Protect, Strengthen and Grow your assets. To see our complete value proposition, click here.

What is HighGround's nonprofit status?

HighGround Advisors is a tax-exempt public charity described in sections 509(a)(1) and 170(b)(1)(A)(vi) of the Internal Revenue Code.

Is your organization a subsidiary, parent, or affiliate of any other firm?

HighGround Advisors is the parent company to HighGround Trust Company, which was established in 1996 and chartered by the Texas Department of Banking. HighGround Trust Company has a shared services arrangement with HighGround Advisors in which all of the Advisors’ personnel are made available to HighGround Trust Company.

Is HighGround Trust Company a state-regulated trust company?

Yes.

When was HighGround Advisors founded?

1930

When was HighGround Trust Company founded?

1996

What types of assets do you manage?

Endowments and quasi-endowments, charitable trusts and gift annuities, donor-advised funds, corporate assets, operating cash, building funds, real estate and oil and gas.

What is your experience working with nonprofits?

For nearly a century, HighGround has managed assets for various charitable and nonprofit clients. The client asset mix is comprised of endowments, quasi-endowments, other charitable gift accounts and operational or building funds for nonprofit organizations. HighGround’s portfolio includes over 450 nonprofits, churches and beneficiaries. We manage approximately 950 trusts, annuities, donor-advised funds and over 6,700 accounts. We currently have over $2 billion in assets under management.

Do you have a Code of Ethics Policy?

HighGround has an established Code of Ethics and Conflict of Interest Policy and proper internal compliance controls in place. These controls are monitored by our Internal Auditor and Chief Technology and Compliance Officer. These policies and our SOC 1 Report are available upon request and linked here.

Do you have a Privacy Policy?

You can view our privacy policy here.

What is HighGround’s governance structure?

HighGround Advisors is a Texas not-for-profit corporation recognized as a public charity under Sections 509(a)(1) and 170(b)(1)(A)(vi) of the Internal Revenue Code. HighGround is a no-member organization and is an integrated auxiliary of the Baptist General Convention of Texas. However, HighGround receives no funding from the Convention or any other association, does not solicit funds for its own benefit and does not make grants or distributions under its own authority. The Convention maintains the right to elect a majority of the members of HighGround’s twelve-member board of directors and to determine appropriate use designations for any undesignated assets received by HighGround. The remaining members of HighGround’s board are elected by the HighGround board itself. The board is charged with oversight of the company and delegates day to day management to the executive team which currently consists of seven officers. 

Is HighGround willing to meet clients in-person?

Yes, HighGround’s team will conduct in-person meetings with clients. We are also available for meetings via conference call and webex, if desired, to facilitate more frequent meetings.

Has HighGround been a party to any lawsuit, including suits involving malfeasance or professional negligence, within the last ten years?

No.

Does HighGround carry adequate errors and omissions insurance?

Yes, HighGround Advisors maintains a $5 million Depository Institution Bond insuring against employee dishonesty, burglary, robbery, forgery and similar crimes and a $2 million Errors and Omissions policy. Both policies are underwritten by The Cincinnati Insurance Company. HighGround Advisors and our subsidiary, HighGround Trust Company, are equally covered by both policies.

Are there educational materials and programs available to clients?

We routinely communicate with clients and are often requested to make presentations to staff, boards of directors and Investment Committees. The objectives of these meetings are to review capital markets and economic news with analysis of the resulting impact on the portfolio, as well as investment policy compliance and performance results. The content of these presentations will be adapted to the discretion level of the relationship and may vary from client to client. Further, we present and discuss issues or concerns regarding the portfolio.

Additionally, we believe in empowering our clients and their donors with information to make wise charitable giving decisions. Our expert team of in-house lawyers will educate them on the latest and most comprehensive giving solutions. We enhance our clients’ knowledge about planned giving options through group training and one-on-one consultation.

Do you maintain off-site remote back-up capabilities?

HighGround maintains off-site remote back up and tests disaster recovery procedures annually off-site by rebuilding our trust software from code, which is also maintained and stored off-site.

Is HighGround a grant-making organization?

No.

ACCOUNT SUPPORT SERVICES

What is the frequency, format and scheduled delivery date of reports?

  • Quarterly Investment Review: Quarterly, PDF and 4th week after calendar quarter end
  • Fund Performance: Quarterly or other periodic request, PDF and 10th business day following period end
  • Sub-account Level Performance: Quarterly or other periodic request, PDF (account consolidation available) and 4th week after period end
  • Account Statements: Monthly, Quarterly and/or Annually, PDF and 3 to 5 business days after period end
  • Consolidated Institutional Statements: Monthly, Quarterly and/or Annually; PDF and excel; 3 to 5 business days after period end
  • SOC 1, Type II: Annually, PDF and end of January
  • Financial Statement Audit: Annually, PDF and end of April
  • Income Projections: Annually, Excel and upon request

Can reports be customized?

Yes.

When are fees calculated and billed?

Fees are calculated monthly and deducted directly from each account.

Are any reports available online?

Yes, all reports are posted online as they are made available. Our online portal provides real-time access to daily market values and activity, 24/7.

Can HighGround provide tax reports required by the IRS using data accumulated, maintained and calculated from custody records of the year’s activity for all of the following: 1) 1099R on gift annuities, 2) 1041/1041A, 3) 5227, 4) Schedule K-1, and all supporting schedules D&E (where appropriate) on annuity trusts, unitrusts, lead trusts, and pooled income funds?

Yes, HighGround provides tax reporting for all of the forms listed above. HighGround prepares IRS Form 1099R for each annuitant and can consolidate 1099s when an income beneficiary has multiple gift annuities. Additionally, we provide a formal statement to all unitrust beneficiaries in January to notify them of payment changes.

Is tax reporting handled internally or outsourced to a third party?

Tax reporting is handled internally.

How soon after the end of the year are tax reports available?

1099R reports are available on or before January 31 and K-1’s are typically mailed out on or before March 1.

Can you provide an annual statement for each plan beneficiary (with the exception of gift annuities) which lists the year-end plan assets at cost and market; a summary of activity in the plan during the year; the plan’s balance sheet at year-end?

Yes


Will you provide quarterly statements to trust beneficiaries? If yes, is there an additional cost for this service?

Statements are available on a monthly, quarterly and/or annual basis at no additional charge. Quarterly beneficiary statements are mailed out generally no later than the 5th business day. Additionally, our online portal provides immediate access to real-time account balances, transactions and statements.

Can gifts be accepted and invested at any time (if allowed by the governing documents)?

Yes, gifts can be accepted and invested at any time. Once a gift is received, an acknowledgment letter will be sent to you and the gift will then be included on statements. These statements are provided in PDF and Excel formats to you on the requested frequency (monthly, quarterly and/or annually). Additionally, online account access will be provided to you for statement viewing, which provides immediate access to real-time account balances, transactions and statements.

Are you a co-fiduciary?

Yes, HighGround Advisors can serve as a co-fiduciary.

ASSET MANAGEMENT

Are you registered with the SEC or a state securities regulator as an investment adviser?

HighGround Advisors is not subject to the regulations imposed on investment companies under the Investment Company Act of 1940, as amended (ICA), and is not required to register as an investment adviser under the Investment Advisers Act of 1940, as amended (IAA). HighGround is excluded from the definition of “investment company” under Section 3(c)(10) of the ICA, and is exempt from registration requirements of the IAA pursuant to Section 203(b)(4) of the IAA. HighGround Funds are not required to be registered with the Securities and Exchange Commission pursuant to the exemption provided in Section 3(a)(4) of the Securities Act of 1933. 

The exemptions described in the preceding paragraph pre-empt HighGround Advisors from being registered and therefore we do not file a Form ADV Part I or II.

Additionally, the exemptions from regulation referenced above do not preclude HighGround or the Funds from being subject to liability for fraud under Section 10(b) and Rule 10b 5 of the Securities Exchange Act of 1934 (15 USCA §78j (a)(2) and 17 CFR § 240.10b-5 (a)).

Since HighGround is not registered with the SEC, what safety or liability measures are in place to protect clients?

Since HighGround is exempt from registering with the SEC, we focus on many different measures that have been put into place to ensure all client assets are secure and peace of mind is provided to our clients.

HighGround employs The Northern Trust Company to hold assets in custody for the benefit of our clients. The company engages an independent auditor on an annual basis to perform an in-depth report on its internal controls. The Northern Trust provides fund accounting services for each of HighGround’s commingled funds and is examined on a routine basis by the state of Illinois banking department, various other regulatory bodies and independent auditors. Both HighGround and The Northern Trust maintain insurance for the protection of clients.

HighGround Advisors also has Grant Thornton perform an annual financial statement audit and SOC1 examination. Specifically, HighGround Advisors maintains a $5 million financial Institution Bond insuring against employee dishonesty, burglary, robbery, forgery and similar crimes and a $2 million Errors and Omission policy. Both policies are underwritten by The Cincinnati Insurance Company. Finally, the HighGround Fund Disclosure Documents include a complete set of investment and fund operation policies, investment guidelines, and fees and expenses for each fund.

What is your investment philosophy?

See Investment Philosophy

What is your investment process?

See Investment Process

What Funds do you have available?

See Investment Funds

Does HighGround have a spending/distribution policy?

Yes, for the Capstone, Keystone and Cornerstone Endowment Funds.

How are the Endowment Fund spending policies established and how frequently are they reviewed?

Each Endowment Fund has adopted a distribution policy to manage the distribution of income and capital gains to support the achievement of each Fund’s primary objectives to preserve the long-term purchasing power of the individual Fund’s assets. Additionally, the distribution policy provides flexibility to respond to short-term changes in the capital markets and financial circumstances of investing institutions.

HighGround Capstone and Keystone Endowment Funds’ goal over the long-term is to distribute approximately 5% of the Fund’s average net asset value. It is recognized, however, that as a percentage of net asset value, distributions from year-to-year may vary from the long-term distribution target. Due to the passive management of the HighGround Cornerstone Endowment Fund, the goal of the Fund is to distribute approximately 4.5% of the Fund’s average net asset value.

HighGround does not follow a specific rule or formula for determining the level of annual cash distributions. Instead, a variety of quantitative and qualitative analysis is performed in setting each Fund’s distributions. The information includes, but is not limited to: past investment performance, trends in capital market returns, historic, current and projected net asset values (NAV), historical and forecasted average payout rates, current and forecasted economic conditions, the outlook for inflation, and the fiscal environment of each Fund’s investors.

HighGround Advisors formally reviews and sets each Fund’s distribution amount annually and more frequently if circumstances require. Fund distributions may be drawn from ordinary income (i.e., dividends and interest), capital appreciation or Fund corpus, in compliance with the Uniform Prudent Management of Institutional Funds Act (UPMIFA).

 

How do you open an account?

HighGround Funds are designed primarily to serve the needs of nonprofit investors. The initial investment minimum required to open an account will be evaluated based on each relationship and will align with the fee minimum for each service offered by HighGround Advisors. Please email info@highgroundadvisors.org or call 214.978.3300 to obtain information about opening an account at HighGround Advisors.

Do you have Socially Responsible Investments (SRI) or Biblically Responsible Investments (BRI)?

HighGround’s Funds are subject to a social investment policy that prohibits investments in companies and businesses that are principally engaged in, or publicly recognized as being principally engaged in, the sale, distribution, production, promotion, or activities related to alcohol, tobacco, gaming services, adult entertainment, abortion or in any company whose mission or purpose is inconsistent with HighGround’s organizational purposes. These restrictions are applied in HighGround’s sole discretion and may preclude the Fund from investing in certain investment opportunities.

Notwithstanding this policy, investments in third-party commingled funds, mutual funds or private investment funds may occur. In these cases, investments are governed by the third-party fund’s investment guidelines. Such third-party guidelines may or may not be consistent with HighGround Advisor’s social policy or other investment policies and guidelines for the Fund.

What does manager of managers mean?

HighGround has elected to employ a “manager of managers” process. As the investment advisor, HighGround may allocate the Asset Class Funds’ investments among multiple investment managers, each of which is responsible for investing the allocated portion of the portfolio according to a pre-determined investment mandate. HighGround continuously monitors the performance and operations of the investment managers. HighGround is responsible for the investment construction of the Funds and, as such, makes recommendations of investment managers to the Board for review and approval and termination as necessary.

Do you have share classes?

The HighGround Capstone and Keystone Funds have three classes of shares designed to serve the needs of its investors. Share classes are a common way of offering the same investment at different fee levels, reflective of cost efficiencies gained from larger asset sizes. The investment objectives and strategies, portfolio managers and account administration services are the same across all share classes.

The remaining HighGround Fund-of-Funds and Asset Class Funds do not have share classes.

 

How many investment managers do you currently track and describe the steps in your due diligence/search for manager selection?

HighGround constructs diversified multi-asset class investment portfolios using our 17 proprietary asset class investment funds. Our investment funds are constructed using over 50 world-class institutional investment firms with investments in over 200 individual strategies and/or funds. HighGround’s investment funds are used as the “building blocks” for constructing multi-asset class investment portfolios.

Our investment management research process applies to all managers regardless of whether they are included in HighGround’s investment funds or third-party mutual funds (or a combination of the two) contained in a client’s customized separate investment fund.

After an investment manager is hired and added to a portfolio, ongoing due diligence consists of periodic conference calls and in-person meetings to review portfolios and discuss questions and issues. In-person meetings usually occur annually, and in many cases more frequently, either in HighGround’s office or the manager’s office. A periodic review of each manager is also conducted which includes documentation of any changes in the firm’s investment staff, investment process or portfolios. Staff monitors the manager’s performance and risk characteristics on a monthly basis. Any adverse developments with a specific manager triggers an immediate review of the manager.

Can you provide additional fund information?

For more information on HighGround Fund's investment objectives, guidelines, strategies, distribution policy, restrictions and general policies regarding the operational aspects of the funds, please contact David Slover at david.slover@highgroundadvisors.org and request a copy of our Fund Disclosure Document.

How often are established investment programs monitored to ensure continuing adherence to plan objectives and donor preferences?

HighGround’s investment strategies and funds are constantly reviewed to ensure that all investment objectives are achieved, and that all underlying investment managers and strategies are fulfilling the role they have been tasked with performing within the portfolio. In addition, all individual trusts are formally reviewed annually. This review consists of reviewing trust documents, applicable investment objectives and unique considerations of each individual situation to confirm that no adjustments are needed in investment objectives or strategy.

Can you offer training to Board and Investment Committee members as it relates to their fiduciary responsibilities?

Yes, HighGround’s Vice President and General Counsel would offer training to your Board and Investment Committee members as it relates to their fiduciary responsibilities. Additionally, HighGround’s standard investment materials and presentations will enable your Board and Investment Committee members to capably fulfill their fiduciary responsibilities. HighGround has a thorough knowledge and understanding of the Uniform Prudent Management of Institutional Funds Act (UPMIFA) which governs the management, investment and expenditure of institutional funds. HighGround’s endowment management process ensures clients meet UPMIFA requirements.

Can your team help create an Investment Policy Statement (IPS)?

Yes, HighGround’s investment team is experienced in developing and enhancing Investment Policy Statements for clients.

Are custody services provided internally or by a third party?

Northern Trust Company (NTC) serves as the custodian of the assets of the HighGround Funds and settles all portfolio trades as directed by the investment managers and HighGround Advisors. As accounting agent, NTC carries out all administrative services related to the Funds including calculating the Fund’s Net Asset Value (NAV), unit values, income distributions and other distributions. In addition to its other duties as custodian, Northern Trust, pursuant to a Securities Lending agreement, serves as the securities lending agent on behalf of the Funds. Northern Trust also calculates the investment performance for HighGround Funds and the investment performance of the underlying managers.

Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., 23 international locations in Canada, Europe, the Middle East and the Asia-Pacific region, and 18,100 employees globally. As of March 31, 2018, NTC had $8.1 trillion in assets under custody.

Do you offer safekeeping services?

Bank of America is HighGround’s partner for treasury management, banking services and safekeeping services and Matrix Financial Solutions is a third-party administrator of investments in mutual funds.

How do you measure risk of your client’s portfolios? 

Standard deviation, Sharpe ratio, maximum drawdown, tracking error (active risk), beta, interest rate risk (duration), credit quality, other portfolio characteristics including market capitalization, economic sector and regional exposures, market valuation, and portfolio holdings compared to investment fund benchmarks are included in HighGround’s quarterly investment reporting. Market risk factor analysis, risk-adjusted return metrics, value-at-risk and downside scenario analysis, and risk/return attribution can also be included in client reports as requested.  To measure and control risk, HighGround uses the following tools: FactSet, eVestment, Bloomberg, Morningstar and StyleADVISOR.

Explain your process in managing and monitoring counterparty risk.

HighGround relies on its investment managers to directly manage investment counterparty risk. Most of HighGround’s exposure to counterparty risk comes through its fixed income funds. As part of the ongoing monitoring of investment portfolios, we regularly review investment managers’ policies with respect to counterparty exposure and approved investment counterparties. HighGround is comfortable that counterparty risk is well managed within its investment portfolios.

Describe the firm’s process for evaluating a client’s investment performance and how this is communicated to the client.

Once a portfolio is invested, HighGround continually monitors the strategy to ensure it remains appropriate, including due diligence and oversight of investment managers in the strategy, risk management, rebalancing portfolios in accordance with a rebalancing policy, monitoring the portfolio for adherence to guidelines and performance measurement and reporting.

HighGround’s Quarterly Investment Review describes the performance of capital markets for the quarter, including global macro activity that has impacted markets worldwide. This capital market backdrop informs the performance evaluation of client portfolios and HighGround Funds. Further commentary is provided in the Review on what investment styles, market capitalizations and investment managers were the drivers of excess return for the period.

What is HighGround’s view on alternative or private investments inside a diversified portfolio?

We believe alternative investments can play an important role in improving the diversification and risk-adjusted performance of long-term, multi-asset class portfolios. Moreover, we believe the perpetual investment horizon of endowment funds is particularly well-suited to benefit from these strategies.

HighGround generally views the alternative investment universe from a liquidity perspective. Investments in private equity, fixed income and real assets that are made in the private markets offer return premiums associated with the illiquidity and longer-term nature of these investments. Since only a small portion of an endowment fund’s capital is typically needed to meet current spending/distribution and other financial obligations, most endowments are in a good position to earn these return premiums over time. The inclusion of these strategies also improves an endowment fund’s overall investment diversification. As a result, long-term expected investment returns are increased and expected risk decreases, improving the endowment fund’s risk-adjusted performance.

HighGround views risk reduction, not return enhancement, as the primary role of semi-liquid marketable alternative investments (e.g. hedge funds), in a long-term multi-asset class portfolio. By investing in hedging strategies that provide both long and short investment exposure with low statistical correlation to the traditional equity and fixed income markets, a significant portion of the capital markets’ systematic risk can be eliminated with these strategies, adding a layer of protection during volatile down-market periods. By including a sensible allocation to marketable alternatives, overall portfolio risk can be reduced without sacrificing long-term expected return, further improving an endowment fund’s risk-adjusted performance.

What is your policy on soft dollars?

As a manager of investment managers, HighGround Advisors does not receive any benefit from soft dollars. Where HighGround has hired investment managers for separate account management, some of these managers may receive soft dollars for research and/or other brokerage services that may directly and indirectly benefit client portfolios. HighGround performs a periodic review of each separate account managers’ brokerage practices which includes soft dollar policies.

Do you receive any 12b-1 fees or other compensation or revenue share from any investments that are or will be contained in our account and, if so, are they used to reduce our costs?

HighGround does not receive any 12b-1 fees, revenue sharing or other compensation in any form from investments in our clients’ portfolio. HighGround’s goal is to render objective, independent and conflict-free investment management services.

GIFT PLANNING

Do additional gifts/contributions by a previous donor to a unitrust incur additional per donor or per beneficiary charges? What about terminations?

There are no additional charges for additional gifts/contributions by a previous donor to a unitrust or for terminations.

Do you have in-house legal counsel available to review charitable trust agreements and to advise on matters affecting Planned Gifts such as changes in tax legislation?

Yes.

Is your staff experienced with advising clients on funding options for life income gifts with complex assets?

HighGround’s in-house legal counsel has extensive experience in planning, drafting and executing life income gifts with complex gifts such as real property, closely-held stock, mortgages, insurance, retirement plans, annuities, valuable collectibles and oil and gas interests. We have real property and minerals management experts on staff available to work with donors directly.

Is your in-house counsel willing to talk to donors of nonprofit organizations directly?

HighGround will follow the direction and desires of our nonprofit clients in responding to and meeting with donors. If HighGround should need to initiate contact with your donor(s), that would be discussed with appropriate staff beforehand. Should your donor contact us directly, you would be advised as soon as possible by email or phone, as appropriate.

Can HighGround help with gifts of minerals and/or real estate?

Yes. Our legal team is backed by both a real estate department and a minerals management team.

Will you prepare my will?

HighGround Advisors cannot draft wills for your donors because it would constitute a conflict of interest. HighGround Advisors will provide testamentary gift language for use by a donor’s attorney to accomplish charitable goals. HighGround Advisors will provide attorney referrals for wills and estate planning proposals upon request.

Does HighGround offer Donor-Advised Funds?

Yes, HighGround Advisors does offer donor-advised funds for individuals wishing to establish an account solely for charitable giving purposes. For additional information on this giving solution, visit donor-advised funds or contact David Slover at david.slover@highgroundadvisors.org.