Rotary International

Q. Are the president and president-elect compensated for their services to RI?
A. No. The president and president-elect do not receive any compensation.

The RI Bylaws state: “The general secretary shall be the only officer to receive compensation. The board shall fix such compensation. There shall be no payments, including any expressions of appreciation, honoraria or similar payments, to any other officer or the president-nominee, other than reimbursement of reasonable, documented expenditures as authorized pursuant to the expense reimbursement policy established by the board.”

(RI Bylaws 6.130., “Compensation of Officers”) See Rotary Code of Policies 68.040, “General Officer’s Expenses,” for expense reimbursement policy.

Q. What are RI’s costs to support the activities of the president, president-elect, and president-nominee?
A. RI must report all reimbursed expenses paid to the president, president-elect, and president-nominee and the office of the president, as well as payments made on their behalf, per RI Bylaws 17.080. See a detailed list of   presidential expenses (PDF).

Q. What has been RI’s historical return on investments? How has this return compared to its benchmark return?
A. RI has earned an average annual return of 7.3 percent for the 10-year period ending 30 June 2007, which is comparable to the benchmark average of 7.6 percent.

Q. How much does RI pay in investment fees?
A. Investment fees are primarily a function of the asset classes in which the funds are invested and the amount of funds under management. In fiscal 2007, RI paid US$409,000 in investment fees, or less than one half of one percent of the market value of Rotary International’s investments.

Q. What is the purpose of RI’s General Surplus Fund?
A. The purpose of the General Surplus Fund is to provide for the long-term financial security of RI and is intended to be used in the event of emergencies and unforeseen circumstances. The fund includes RI’s unrestricted cash, plus marketable securities, plus (or minus) any receivable (or payable) from (or to) The Rotary Foundation.

Q.  What is the purpose of RI’s Operating Reserve?
A.  The purpose of the Operating Reserve is to provide for Rotary International’s long-term financial security by requiring the retention of funds at a level to support the annual expenses of RI less those associated with the convention and the Council on Legislation. The operating reserve consists of the General Surplus Fund less Board-designated funds (convention expense reserve and investment earnings reserve fund).

The Rotary Foundation

Q. Are the trustee chair and chair-elect compensated for their services?
A. No. The Foundation trustee chair and chair-elect do not receive compensation for their services. In addition, they do not have assigned staff or dedicated office support and are not entitled to, nor do they receive, reimbursement for theme materials, public relations, officer service expenses, housing, cost of family attending the convention, or moving expenses. Learn more.

Q. What are program operations expenses, fund development expenses, and general administrative expenses?
A. Program operations expenses include the costs associated with planning, managing, evaluating, and reporting on the Foundation’s programs and with supporting the Rotarians who implement the specific service activities. These costs include personnel, services, publications, postage, and supplies.

Fund development expenses include the cost of personnel, services, communications, publications, public relations, supplies, computer support, legal counsel, and recognition items involved in acknowledging the generosity of donors to the Foundation.

General administrative expenses include the cost of personnel, services, communications, computer support, supplies, legal counsel, audit fees, and staff support to the Trustees.

Q. What percentage of my Annual Programs Fund contribution supports the Foundation’s programs?
A. One hundred percent of your contributions support the Foundation’s programs. The Annual Programs Fund contributions are invested for three years and then become available for programs. Net investment earnings are used for administrative expenses. Over the years, net investment returns have been adequate to cover all administrative expenses. Learn more by reading about the SHARE cycle or reading Rotary Foundation Facts.

Q. Why do the Trustees invest the Foundation’s assets in the equity markets and what have the results been?
A. Based on advice from independent investment consultants and qualified investment advisors, the Trustees have approved and follow a long-term investment policy to maximize the Foundation’s investment returns. Over the long-term, the return on equities has significantly exceeded the return on bonds. The Foundation’s investment policies are developed to participate in this long-term favorable return.

Q. What has been the Foundation’s historical return on investments?
A. The Foundation has three separate funds with different investment strategies depending on the needs and uses for the funds. The Foundation reports investment returns by fund and not for the Foundation as a whole.

The Annual Programs Fund and the Permanent Fund have earned an average annual return of 7.4 percent and 7.5 percent, respectively, for the 10-year period ending 30 June 2007, while their respective benchmarks returned 8.1 percent for the same period.

The PolioPlus Fund has earned an average annual return of 5.0 percent for the 10-year period ending 30 June 2007, slightly lower than the benchmark return of 5.1 percent for the same period.  The lower return is attributable to the asset class in which the funds are invested. The fund invests 100 percent of its assets in fixed income securities because of the short time horizon of the fund and the importance of preserving existing assets.

Q. What are unrealized gains and losses on investments?
A. Unrealized gains and losses are those that result from changes in the market value of investments and have not resulted from a transaction.  For example, an unrealized gain occurs when a security increases after an investor buys it, but has yet to sell it.  An unrealized loss occurs when a security decreases after an investor buys it, but has yet to sell it. Gains or losses are said to be "realized" when a security is sold.

Q. How much does The Rotary Foundation pay in investment fees?
A. Investment fees are primarily a function of the asset classes in which the funds are invested and the funds under management. In fiscal 2007, The Rotary Foundation paid US$4.5 million in investment fees, or approximately one half of one percent of the market value of the Foundation’s investments. The investment fees are competitive with the fees paid by other foundations and endowments.

The investment fees are reviewed and monitored by the Investment Advisory Committee.

Q. What is the purpose of the Foundation’s Operating Reserve?
A. The purpose of the Foundation’s Operating Reserve is to ensure that funds are available to pay the organization’s estimated operating expenses (excluding PolioPlus expenses) for the current and the next two fiscal years. In addition, the fund is maintained to support 50 percent of the budgeted Annual Programs Fund awards (excluding PolioPlus) for the current year.

The operating reserve pays 100 percent of general administration and fund development expenses and program operating expenses if the operating reserve ratio is 50 percent or higher.

Q. What is the purpose of the Permanent Fund?
A. The primary purpose of the Permanent Fund is to support the programs of The Rotary Foundation in perpetuity. A portion of the fund’s investment earnings will be used to finance the Foundation’s programs. The amount spent is based on the spending policy of the fund. The spending policy is predicated on the principles of preservation of capital, intergenerational equity (needs of today versus the needs of tomorrow), and stability. Read more.

For more information about the Foundation

Call the Foundation's Contact Center at 1-866-9ROTARY (1-866-976-8279), or e-mail contact.center@rotary.org. A team of Foundation specialists will answer calls Monday through Friday from 8 a.m. to 5 p.m. Central Time.

You also may contact your international office.