Unity of Hawai I Endowment Foundation

Unity of Hawai’i Endowment Foundation

In order to have greater separation between an endowment fund and Unity Church of Hawai’i (UCoH), the Endowment Committee (Committee) recommends the formation of a new and distinct, supporting 509(a)(3), Unity of Hawaii Endowment Foundation, to replace Legacies of Aloha. If approved by the congregation, Unity of Hawai’i Endowment Foundation will have its own Board of Directors (albeit selected by the Board of Trusteesof UCoH) to manage the investment portfolio through an investment manager. Legacies of Aloha (LoA) assets ($468,388.23 as of 12/31/2017) will be transferred into the newly created Unity of Hawai’i Endowment Foundation.

There have been concerns that the assets in LoA have been inappropriately allocated in the past. Using the LoA Investor Statements back to 2007, transactions between LoA and UCoH, reveal a total of $314,655.75 has been withdrawn with a total of $21,938.90 being repaid to the Fund, leaving an outstanding balance of $292,716.85. The Committee and the Board of Trustees feel that two of the three withdrawals are in keeping with one aspect of the Legacies of Alohapurpose. Those two withdrawals include:

• Church Capital Improvements: net withdrawal in 2007 in the amount of $36, 276.90 ($38,276.90 minus amount repaid of $2,000),
• Mortgage Repayment: net withdrawal in 2012, in the amount of $119,778.85 ($126,378.85 minus amount repaid in 2012 of $6,600).

A third withdrawal was NOT felt by the Committee or Board of Trustees to be consistent with the purpose of LoAas it was used for the purpose of covering operating expenses. That withdrawal was for:

• Church operating expenses including payments for an Interim Minister and Ministerial Search and staff salaries,net withdrawal in 2014 in the amount of $140,361.22 ($150,000.00 minus amount repaid in 2014 of $885.09, 2015 of $7,729.36 and 2016 of $1,024.33).

Section 2. 2.1 of the LoA document states: “Except in cases of emergency (as defined in Section 7), assets of the program shall not be used to support the Church’s operational expenses, including, without limitation, staff salaries, routine building maintenance, etc.” Section 7 of the LoA document sets out procedures for obtaining congregational approval for any emergency borrowing of endowment funds in an emergency situation and for orderly repayment. These procedures were not followed in this case. Therefore, the Committee and Board of Trustees recommend that this withdrawal be repaid to the endowmentand recommend that the 4% annual distribution allowed from the Endowment Foundation be withheld and used as repayment until this debt is paid.

The attached ballot asks for your vote on the following three items:

1. Establishment of a new and distinct 509(a)(3) organization by ratifying the Articles of Incorporation,the ByLaws and the Appendices,
2. Determination that the withdrawal of funds in 2014 did not comply with the stated purposes of LoA and therefore must be repaid to the Endowment.and
3. Requirement that the 4% annual distribution allowed from Unity of Hawaii Endowment Foundation to Unity Church of Hawai’i be withheld until the repayment of the 2014 withdrawal is complete.

OFFICIAL BALLOT FOR

Unity of Hawai’i Endowment Foundation

Board of Trustees & Committee recommend you vote “FOR” each of the items

1. Please vote for ONE of the following:

□FOR I vote to create a new/separate organization, Unity of Hawai’i Endowment Foundation, with its separateBy-Laws, Articles of Incorporation, and Appendices presented at the 2018 Annual Meeting.

□AGAINST I vote NOT to create a new/separate organization, Unity of Hawai’i Endowment Foundation.

□I am submitting this ballot for quorum purposes only and understand this question on this ballot willNot be Countedas either For or Against.

2. Please vote FORor AGAINST the determination that the net withdrawal of $140,361 for the use of operating expenses was outside the purposes of the funds in the LoA and must be repaid.

□FOR: I vote “FOR” determination that the use of funds to cover operating expenses was outside the purposes of LoA and must be repaid to the endowment.

□AGAINST: I vote AGAINST determination that the use of funds to cover operating expenses in 2014 was outside the purposes of LoA.

□I am submitting this ballot for quorum purposes only and understand this question on this ballot willNot be Countedas either For or Against.

3. Please vote FOR or AGAINST the following (Board and Committee recommend you vote “FOR”):

□FOR: I vote to withhold the annual 4% distribution allowed from the Unity of Hawai’i Endowment Foundation to UCoH operating expenses until the outstanding 2014 withdrawal in the amount of $140,361.22 has been repaid.

□AGAINST: I vote not to withhold the annual 4% distribution allowed from the Unity of Hawai’i Endowment Foundation to UCoH until outstanding 2014 withdrawal in the amount of $140,361.22 is repaid (Unity Church of Hawaii will need to find another source to finance the repayment of the withdrawal from Legacies of Aloha if item #2 above is approved).

□I am submitting this ballot for quorum purposes only and understand this question on this ballot willNot be Countedas either For or Against