6 Recommendations For Endowment Management
November 2, 2017 THE NONPROFIT TIMES
Asset allocation is the most important decision that a foundation’s investment committee can make, and it’s a key indicator of future returns.
- “The Advancement of Religious-Based Fundraising Foundations in the United Sates: An analysis of fundraising, endowment management, and governance/disclosure practices of Catholic foundations,” by Walter Dillingham, managing director, endowments and foundations, at Wilmington Trust, provided six recommendations for endowment management for foundations:
- Have an updated investment policy statement that is reviewed annually;
- Focus on a long-term asset allocation that stresses diversification and growth;
- Have a customized benchmark to compare performance returns;
- Review the costs and benefits of the different investment advisor models;
- Monitor the investment advisor on a quarterly basis, but take a long-term view; and,
- Build an experienced and engaged investment committee; use non-trustees with investment expertise.
- While Sarbanes-Oxley Act of 2002 is geared toward public companies, many nonprofit boards aim to follow these best practices to effectively govern their nonprofits. The report also offered another half-dozen recommendations when it comes to governance disclosure:
- Seek to have a diverse, experienced board of trustees;
- Build board committees, including a nominating committee;
- Be proactive with the communications and disclosure;
- Provide the annual report and audited financial statements on the website;
- Consider the benefits of providing an IRS Form 990; and,
- Have a strict conflict of interest policy.