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Administrators

Operation Manual, July 2011

CONTENTS

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INTRODUCTION

This document is intended to provide Sylff program administrators at Sylff institutions with practical information and guidance for efficient and effective management of the program. Queries should be addressed to the Leadership Development section of the Tokyo Foundation (Sylff secretariat ), which is responsible for the overall management of the program.

I. PROGRAM

Generally known as Sylff, the Ryoichi Sasakawa Young Leaders Fellowship Fund was launched by The Nippon Foundation in 1987 with the purpose of cultivating and nurturing leaders who can transcend various boundaries—be it geographical, political, cultural, ethnic, or religious—and engage proactively in addressing the challenges of our age at all levels in our community and in the world. It is an outgrowth of the philanthropic activities of the late Ryoichi Sasakawa, the founder of The Nippon Foundation.

One hallmark of this program is the “decentralization” of program administration, based on the commitment of each endowed institution to assume responsibility for achieving the overall goals of the program, that is, to identify and nurture future leaders in various fields who can make positive changes in society. At the same time, network building is encouraged among the Sylff institutions and fellows, as well as cooperation and collaboration with non-Sylff organizations and individuals.

II. OVERALL ORGANIZATIONAL STRUCTURE OF THE SYLFF PROGRAM

The Sylff program is a collaborative undertaking among the following organizations:

The Nippon Foundation

The Nippon Foundation is the donor of the Sylff endowment. It was established in 1962 to contribute to maritime development, support domestic social welfare and volunteer initiatives, and promote international cooperation with a focus on improving basic human needs, developing human resources, and encouraging international collaboration.

The Tokyo Foundation

The Tokyo Foundation is the organization responsible for overall Sylff program management, including:

1. Collaboration with the steering committees of Sylff institutions to maintain efficient and effective program operations and endowment management
2. Support for Sylff fellows’ research activities and encouragement of network building through various programs and opportunities

Sylff Institutions (Sylff Steering Committees)

A Sylff institution operates the Sylff program through a Sylff steering committee, consisting of a chairperson and committee members. The steering committee is responsible for sound program operations and endowment management at each institution, including:

1. Operation of the Sylff fellowship program (see Section III)
2. Management of the Sylff endowment (see Section IV)
3. Reporting to and communicating with the Tokyo Foundation on the status of the program and endowment management (see Section III 5)
4. Cooperation and collaboration with the Tokyo Foundation on various Sylff-related programs and activities

III. PROGRAM ADMINISTRATION

1. Objective and Scope of the Program

The objective and scope of the fellowship program are stipulated in the Appendix to the original “Agreement” that was signed by the representatives of The Nippon Foundation and the Sylff institution, or in the “Memorandum of Understanding (MOU)” subsequently signed by the representatives of the Tokyo Foundation and the Sylff institution.

Besides institution-specific guidelines, the following items apply to all Sylff institutions:

1. Sylff Identity
   Each Sylff institution has its own program name; some program names have “Sylff” incorporated in them, while others do not. Regardless of whether or not “Sylff” is incorporated in the name, each institution is requested to make clear that its program is a Sylff program and that the fellowship recipients are Sylff fellows who are part of the global Sylff network administered by the Tokyo Foundation.
2. Eligibility
   Fellowships are awarded to outstanding postgraduate students who are enrolled in degree programs with high potential for leadership at the local, national, regional, and international levels in their private and public lives.
3. Scope / Research Areas
   The scope of the fellowships must fall within the parameters of the social sciences or humanities. Recognizing the growing tendency toward inter- and multi-disciplinary approaches, though, students will be eligible for Sylff fellowships if they approach multi-disciplinary research themes from a social science or humanities perspective. If the Sylff steering committee wishes to change the scope of the program, it is requested to make a written proposal to the Tokyo Foundation before implementing the change, since the scope is contractually agreed upon in the original Agreement establishing the endowment. Please refer to Section V (Revision of Agreement) below.
4. Amount of Fellowship
   The Sylff fellowships are intended to enable the best and brightest students to commit themselves fully to their field of study or research. The amount of the fellowship should be reasonably determined according to this intent. It is recommended that the fellowship be comparable to other highly prestigious scholarships and fellowships.
5. Duration of Fellowship
   Fellowships may be awarded for a period of up to three years, provided that the student makes satisfactory progress toward the degree he or she is pursuing. Renewal of the fellowship should be based on an evaluation of the student’s progress by the steering committee at the end of each academic year.

2. Budget

Sylff steering committees are responsible for developing a budget for expenditures, that is, the amount to be set aside for fellowships and administrative expenses in accordance with the “Approximate Breakdown of Annual Expenditures” specified in Appendix 2 of the Agreement. In principle, the budget should be developed on the basis of actual income. Please refer to Section IV for details.

3. Announcement and Selection

The process of selecting fellowship recipients must be open and transparent; the Sylff steering committees should make announcements accessible to eligible students using posters, fliers, websites, institutional and local newsletters, etc., and screen applicants on a competitive basis. The name “Sylff” and its aims should be mentioned in the announcements.

The selection of Sylff fellows should be based on their academic excellence and leadership potential. Each institution can apply its own criteria to select fellowship recipients.

4. Orientation and Communication with Sylff Fellows

Once the new Sylff fellows are selected, they should be fully informed of the Sylff program—its mission, organization, and support programs for the fellows. Orientation and follow-up communication activities should be implemented to facilitate fellows’ understanding. Please keep abreast of recent developments by visiting the Sylff website.

5. Reporting

All Sylff institutions are required to submit the following annual reports punctually.

IV. ENDOWMENT MANAGEMENT *

1. Purpose of Endowment Management

The purpose of endowment management is to:

1. Generate sufficient income in accordance with the mid- to long-term plans for the fellowship program, and
2. Maintain the original capital (US$1 million) permanently while ensuring gradual growth of the capital.

2. Separate Accounting/Pooled Investment

In principle, each institution is required to maintain a separate account for the Sylff endowment from other funds of the institution. In cases where the endowment is pooled and invested with other funds, the amount of the Sylff endowment and its income must be clearly demarcated. Generally, pooled investments are approved when an institution’s fund is significantly large enough to achieve higher returns by scale and when fund management is conducted by groups of experts in accordance with rules approved by the institution’s board as being transparent and accountable with clearly identified risks, returns, and responsibilities.

3. Investment Guidelines

3-1 Principles

A.Basic Policy

The Sylff endowment must be invested in a “safe and secure manner,” which is defined as follows:

1. Investable assets: The core of investments should be bank deposits or bonds rated A or better by one of the following three rating agencies: Standard and Poor’s, Moody’s, or Fitch.
2. Diversification: Bond investments should be well diversified, avoiding concentration in terms of issuers, industries, and countries.
3. Investment period: The average maturity should be less than five years.

B.Reporting

The financial report should be submitted within three months following the end of each fiscal year. The report consists of:

1. Income-Expenditure Statement / Breakdown of Capital “Attachment 3″ (Download Sample Excel File)
2. Bond Portfolio in case of bonds, and/or and Description of Deposit in case of bank deposits “Attachment 4″ (Download Sample Excel File)
3. Review Report confirming the validity of above statements “Attachment 6″ (Download Sample Word File)
4. Bank statement(s) showing the amount of cash, term deposits and bonds at the end of fiscal year

C.Use of Income / Re-investment

In accordance with the “Approximate Breakdown of Annual Expenditures” specified in Appendix 2 of the Agreement, each institution is required to reinvest a portion of the income back into the capital as a hedge against inflation and other forms of financial instability. Even when there is no provision in the Agreement concerning the ratio, the institution is strongly recommended to return 30% (or more) of income to reserves and use remaining amount (at most 70%) as expenditures for fellowships and administrative expenses. Administrative expenses should be 5% or less of expenditures.

Please refer to the “Flow Chart of Sylff-related Money”.

Only realized gains should be used as sources for expenditures. Although unrealized gains may arise for bonds whose market values can be assessed, these gains shall not be recognized as sources for expenditure.

D.Use of Reserves

In case of a contingency, such as when continuing low-interest rates do not generate sufficient income vis-à-vis planned expenditures, the use of reserves （including partial or non-execution of mutually agreed re-investment plan) may be approved but only under the following conditions:

1. The Sylff institution must first receive the approval of the Tokyo Foundation.
2. Total fellowships awarded should not be more than the average amount granted over the past three years.
3. Approval for the use of reserves is contingent on the entire capital not falling below the original capital of US$1 million.
4. For investments in currencies other than US dollars, the amount of the original capital will be calculated using the exchange rate applied at the time of the conversion from US dollars to that currency.
5. The use of reserves will be limited to a period of five years from July 1, 2011, to the end June 2016. (A decision on whether or not to continue this measure will be made by July 1, 2015, one year prior to the end of this period.)

3-2 Exceptions

A.Basic Policy

If a Sylff institution intends to invest in bonds that carry higher risk or invest in stocks for historical reasons or on its own judgment, it will need not only to disclose the breakdown of its investment but also demonstrate that it has the organization and capacity necessary to manage such a riskier portfolio.

For investment in stocks, unrealized gains may be used to cover expenditures, but certain rules must be established and upheld.

1. Rules determining percentage over capital for targeted earnings and planned expenditures must be clarified. These rules must receive the approval of the Sylff steering committee and the Tokyo Foundation
2. Actual expenditures in the medium- and long-term (about five years) must not exceed 70% of actual earnings. (The portion may vary according to Sylff institution.)
3. The original capital of US$1 million must be maintained

B. Reporting

Please submit your financial report within three months following the end of each fiscal year. The report should consist of:

1. A consolidated financial report explaining the breakdown of investments and the organization/capacity necessary to manage the riskier portfolio (no prescribed format)
2. A statement for “Exceptions” that confirms A b above “Attachment 5″ (Download Sample Excel File)
3. Review Report confirming the validity of above statements “Attachment 6″ (Download Sample Word File)
4. A bank statement showing the amount of capital at the end of fiscal year

3-3 Investment in Assets Denominated in Currencies Other than Key International Currencies

1. Sylff institutions are allowed to invest up to US$300,000 (equal to 30% of the original capital) or equivalent amount in assets denominated in their local currencies.
2. Investment in local currency assets should follow the Investment Guidelines.
3. Investment in local currency assets is a special provision applicable for five years from July 1, 2011. The Tokyo Foundation will decide on whether or not to continue this measure by July 1, 2015.

V. REVISION OF AGREEMENT

When a Sylff steering committee wishes to revise Appendix 1( Management of the Fund) or Appendix 2 (Scope and Objective of the Program,) it should consult with the Tokyo Foundation and submit a written proposal before taking any action. The matter will be discussed, and, upon agreement, a Memorandum of Understanding (MOU) will be signed to execute the revision.

If both the Foundation and the steering committee agree that the proposed changes do not require an MOU, the changes can be implemented by way of an exchange of written correspondence (letter, fax, or e-mail) between the chairperson of the Sylff steering committee and the director for leadership development of the Tokyo Foundation.

For further information and inquiries, please contact the Sylff secretariat .

*Subject to revision, as required by financial market conditions.

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GLOSSARY OF FINANCIAL TERMS

Administrative expense
Administrative expenses refer to a university’s operating costs in the administration of the Sylff program and management of the Sylff endowment.

Budget
The budget refers to the income and expenditure plan, which serves as the basis for the allocation of fellowships.

Capital
The capital is the 1 million US dollars of the original capital (explained below) plus the reserves earned through investment (explained below).

Earnings
Earnings are the sum of realized gains and change in unrealized gains (as explained below).

Expenditure
Expenditure refers to administrative expenses, as mentioned above, and fellowship disbursements.

Fellowship
A fellowship refers to the fund provided to a student who is selected for a Sylff fellowship.

Income / realized gain
Income refers to realized gains, such as interest from bank deposits and coupon interest from bond investments, as well as gains or losses from the sale of equities and bonds.

Original capital
The original capital is the 1 million US dollars (or equivalent in cases where the capital is converted into another currency, using the exchange rate at the time of conversion), donated to each Sylff institution. If the original capital is divided into two or more currencies, the amount for each currency should be calculated using the exchange rate at the time of initial conversion.

Reserves
Reserves are the part of capital that exceeds the original capital (US$1 mil.) and are added to the capital.

Unrealized gain
An unrealized gain is the difference between the book value and market value of equity and bond investment.

Flow Chart of Sylff-related Money

Attachments
1. Program Report “Attachment 1″ (Download Word File)
2. Sylff Fellows Information List “Attachment 2″ (Download Excel File)
3. Income-Expenditure Statement / Breakdown of Capital “Attachment 3″ (Download Sample Excel File)
4. Bond Portfolio / Description of Term Deposit “Attachment 4″ (Download Sample Excel File)
5. Statement for “Exceptions” “Attachment 5″(Download Sample Excel File)
6. Review Report “Attachment 6″ (Download Sample Word File)

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