6 Recommendations For Endowment Management

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.