As a non-profit organization or foundation, it is essential that you have access to experienced and knowledgeable investment management. Having the right investment management support in place can make the difference between obtaining your desired financial results and missing out on those opportunities – ultimately impacting your ability to do good work and generate funds for future initiatives.
We’re here today to look at the typical services offered by a registered investment advisor so that you can ensure your organization has the right financial professional overseeing your assets.
The Investment Management Consulting Process
Investing for a non-profit organization requires careful investment management, consulting and monitoring. Professional investment consultants typically provide tailored advice to suit the nonprofit’s needs, such as risk mitigation, asset diversification, portfolio construction and cost savings. They can also provide the necessary tools and technology to track investments and assess risks associated with investing decisions.
A well-thought-out investment strategy is crucial for any non-profit, endowment, or foundation to sustain and potentially grow its funding base. If you are responsible for managing an endowment, foundation, or non-profit, investment management consulting can help you prudently manage funds while avoiding potential risk exposure.
The investment management consultant that you select should be fully aware of your organization’s goals, principles, and values. Their focus should be solely on meeting your organization’s financial goals, assuming the investment strategies fall within your risk tolerances and align with your core values.
An Investment Policy Statement
Developing an investment policy statement for your nonprofit, endowment, or foundation can help ensure that your organization’s investment advisor understands and follows investment criteria that are in line with your specific needs, objectives, and values. This statement sets out investment advice and outlines strategies, restrictions, and goals that must be taken into consideration when making decisions.
A clear investment policy statement also serves as an agreement between the investment advisor and client regarding roles, responsibilities, reporting requirements, and investment management details. Ultimately, this policy statement ensures that investment activities are properly carried out to meet the stated objectives of the nonprofit organization.
Money Manager Selection
Most investment advisors act as a manager-of-managers. In other words, the investment advisor recommends which money managers should be considered to invest the assets of your organization. This can take a fair amount of research and time, especially given any specific requirements or restrictions that your organization has in relation to the investment policy statement’s guiding principles.
Your investment advisor should be able to provide you with a complete understanding of how and where the money manager(s) will be investing your organization’s assets.
Since money managers play the crucial role of stewarding money, researching who they are and their qualifications should be a part of any due diligence. Assessing their philosophy, process, personnel, prior performance, and fees are important components of ensuring a sound money manager selection process for any nonprofit organization.
Portfolio Monitoring & Performance Reporting
As part of their role, an investment manager is responsible for monitoring and reporting on the performance of the donor charity’s portfolio. They should be tracking market trends and evaluating any potential adjustments that may need to be made to the portfolio to ensure that it is performing at its optimum level, while also accounting for risk tolerances.
Your investment advisor should also be providing you with reports related to asset allocations, investment fees, and expenses, as well as any regulatory requirements or changes that could impact your organization’s portfolio.
The performance reporting should use metrics like internal rate of return (IRR) as a guideline to calculate the future value added to your organization’s donations.
Charitable Gifting Strategies for Donors
Investment managers have a critical responsibility to ensure that nonprofit organizations are able to provide charitable gifting strategies for donors. The goal of these strategies is to create maximum benefit while minimizing any risks to the donor. This is especially important given the changing legal and fiscal environment related to charitable giving.
Investment managers must stay up-to-date with current laws and regulations in order to properly advise nonprofits on designing gifting plans that best serve donors, as well as support their education in understanding the benefits of contributing philanthropically. A good investment manager should continually strive to meet these expectations through comprehensive analysis and evaluation of available options for charities and donors alike.
Managing investments for non-profits, foundations, and endowments is a complex and challenging process. From long-term planning to short-term monitoring, effective investment managers must understand the unique circumstances of each organization they serve in order to develop strategies that take into account the organization’s individual needs, financial resources, goals, and restrictions.
By providing comprehensive guidance and support throughout the entire process, an experienced and knowledgeable investment manager can help organizations reach their desired financial objectives. With a customized approach that covers every stage of the investment process – from strategic asset allocation to portfolio risk management – a qualified investment manager can help your organization create a well-established fiduciary process for the management of your assets. Ultimately, when it comes to securing your nonprofit future through effective resource management, there is no replacement for an experienced professional who understands organizational needs.
As wealth managers in Washington, D.C., the investment advisors at Brown | Miller specialize in comprehensive financial planning and wealth management strategies for nonprofits, foundations, and endowments. Contact us today to learn more about how we can help your organization.
Disclaimer: This article is intended for informational purposes only, and not to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs, and investment time horizon. This report is for general informational purposes only and is not intended to predict or guarantee the future performance of any individual security, market sector, or the markets generally.
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