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Changes in endowment net assets for the year ended Dec. 31, 2010: Unrestricted


Temporarily restricted


Net assets, beginning of year


Investment return


Investment income, net of fees


Net appreciation (realized and unrealized)


84,801 46,160


-


531,756 115,034


- - 187,639 83,900


616,557 348,833


Total investment return $ 130,961 $ 646,790 $ 187,639 $ 965,390 New gifts


83,900


Appropriation of endowment assets for expenditure


Net assets, end of year $ (77,560) (542,003) - (619,563) - $ 1,821,311 $ 12,409,095 $ 14,230,406


Return Objectives and Risk Parameters: The Legion has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment, while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Legion must hold in perpetuity or for a donor-specifi ed period(s). Under this policy, as approved by the National Executive Committee, the endowment assets are invested in a manner that is intended to produce income while assuming a low level of investment risk.


Strategies Employed for Achieving Objectives: To satisfy its long-term rate-of-return objectives, the Legion relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Legion targets fi xed-income securities to achieve its long-term return objectives within prudent risk constraints.


Spending Policy and How the Investment Objectives Relate to Spending Policy: Distributions will be limited to interest, net of fees. Capital appreciation (realized and unrealized) is added to the principal of the American Legion Endowment Fund; however, capital appreciation from the Samsung Scholarship Fund is temporarily restricted and can be spent according to the spending policy. Endowment-fund principal, unless otherwise directed by the donor, shall not be disbursed except for emergency situations. In order to make a principal disbursement, a majority vote by the National Executive Committee is required.


NOTE 15 – EMPLOYEE BENEFITS


The Legion has a defi ned-benefi t pension plan covering substantially all of its employees as well as those of certain affi liated and subordinated groups. The plan was established in 1944 by vote of the national convention. Contributions to the plan are made by the Legion and other participating groups on the basis of annual actuarial valuations.


In May 2008, the Legion voted to freeze the plan eff ective June 30, 2008, and adopt a 401(k) savings plan with a qualifi ed automatic-contribution arrangement eff ective July 1, 2008. The result of the freeze is that current employees still receive the benefi ts they had earned as of June 30, 2008, but no future benefi ts will be earned and no new employees will be added. The 401(k) savings plan calls for a 100-percent match of the fi rst 1 percent contributed by the employee, and a 50-percent match of the net 5 percent contributed by the employee. Thus, the maximum matching percentage an employee will receive is 3.5 percent. The Legion made contributions of $364,833 and $336,809 in 2011 and 2010, respectively.


Money market accounts


U.S. government and agency obligations


Asset-backed securities Municipal bonds Corporate bonds


Common stock Materials Industrials


Consumer goods Energy


Health care Financials


Telecommunication Technology


Utilities and other Accrued interest


Permanently restricted


Total $ (53,401) $ 1,716,524 $ 12,137,556 $ 13,800,679


The following table sets forth the Legion’s portion of the plan’s funded status and amounts recognized in the Legion’s consolidated statement of fi nancial position at Dec. 31, 2011 and 2010:


2011 Benefi t obligation


Fair value of plan assets Funded status


Interest cost Actual return on assets


Amortization of prior service costs Amortization of loss


Diff erence between expected and actual return on assets


Net periodic pension cost Net loss (gain)


Prior service cost


Pension-related changes other than net periodic pension cost


Prepaid benefi t cost


Accumulated benefi t obligation Vested benefi t obligation Net periodic pension cost Benefi ts paid


Measurement date


Estimated future benefi t payments: 2012


2013 2014 2015 2016


2017-2021


$ (51,114,809) 47,811,011


$ (3,303,798) $ 2,714,869


(1,996,724) 121,085 666,288


(1,770,796) $ (265,278) $ 5,232,668


(121,085) $ 5,111,583


$ 14,511,744 51,114,809 50,949,483 (265,278) 2,785,091


12/31/2011


$ 3,226,158 3,289,933 3,337,613 3,383,626 3,454,286 17,186,034


The asset investment policy is a lower-risk strategy. The fair value of the Legion’s defi ned benefi t plan assets at Dec. 31, 2011 and 2010 are as follows. See Note 5 for descriptions of inputs for each type of asset.


Quoted Prices in


Fair-Value Measurements at Dec. 31, 2011, using Signifi cant


Active Markets for Identical Assets (Level 1)


$


1,623,455 14,601,727 -


- -


634,981


1,728,855 2,206,411 1,469,565 1,781,671 2,462,856 501,042


1,626,752 813,442 303,792


Other Observable Inputs


(Level 2) $


Signifi cant Unobservable Inputs


(Level 3)


- $ -


5,556,069 1,768,208 10,732,185


- -


- -


- -


$ 29,754,549 $ 18,056,462 $


- - -


- -


- -


- -


- - -


2010


$ (47,056,871) 48,599,378 $ 1,542,507


$ 2,707,448 (4,433,441) 121,085 783,605


787,687 $ (33,616)


$ (1,242,855) (121,085)


$ (1,363,940)


$ 14,246,466 47,056,871 46,768,704 (33,616) 2,779,150


12/31/2010


2012 | T e American Legion Annual Report 51


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