Investment Advisor to Charitable Organizations

Client: A not-for-profit organization whose board had determined that professional management of its endowment fund was necessary.

Situation: The endowment fund had been managed by the board’s finance committee using primarily index funds. The committee desired professional support to develop an investment policy and implement that policy to properly deliver its fiduciary duties in management of the organization’s funds. The committee also wanted to provide accurate investment performance reporting for the board’s ongoing review. In addition, because the organization had a relatively small administrative office, there was a need for assistance in periodic funding of a bank operating account as well as administration of in-kind gifts and active transfers between sub-accounts of the trust.

Solution: We assisted the committee in developing an investment policy. Over time, the committee members became increasingly comfortable in taking control over the policy and making modifications to it as the organization’s needs changed. We managed the investments in the sub-accounts and provided greater flexibility in investment reporting, consolidating various accounts for performance tracking purposes. We established a separate gift account for in-kind donations, facilitating the transfer of donors’ securities and immediately liquidating them with institutional brokers at low commission rates. Proceeds were then immediately invested in the sub-account designated by the committee.

Results: We provided a level of support to this not-for-profit organization that saved it operating expenses and improved its recordkeeping substantially. The client also benefited from improved investment returns that resulted from an enhanced level of investment discipline.