Resources

UPMIFA and its Impact on Spending in Times of Market Decline

It is not unusual for the value of endowments to decline significantly when markets are turbulent – often below their original values. Fiduciaries grapple with the question of whether and how much to spend from endowments in such periods, particularly when they are subject to restrictions imposed by donors. This edition of ClearView Insights draws on guidance from the Uniform Prudent Management of Institutional Funds Act (UPMIFA) to provide an overview of the challenges of addressing “underwater” endowments in times of market volatility, including suggested steps and alternatives for consideration by fiduciaries.

Investing with an “Infinite” Time Horizon

As the Center for Fiduciary Studies has written, “One of the most important decisions the Investment Steward has to oversee is the determination of the portfolio’s time horizon.” This edition of ClearView Insights explains the challenge that fiduciaries face in balancing the near-term needs of an organization with steps required to help ensure its long-term sustainability. While broadly accepted best practices to achieve such balance do not exist, this paper suggests areas of inquiry for fiduciaries as they consider how to invest with a long-term (and sometimes infinite) time horizon.

Investment Fees for Foundations, Endowments and Nonprofit Organizations

Investment fees are among the most widely discussed topics for fiduciaries of foundation and nonprofit endowments. Based on the findings of our 2019 fee study, this edition of ClearView Insights presents the seven key factors that we believe most influence investment fees. It is critical that fiduciaries become knowledgeable in this area, exercising their best collective judgment to ensure that fees incurred are “appropriate and reasonable,” as required by the Uniform Prudent Management of Institutional Funds Act (UPMIFA).

Selecting Investment Advisers for Foundations, Endowments and Nonprofits - An RFP Primer

For fiduciaries of foundations, endowments and nonprofits, the selection of appropriate investment advisers is among the most critical responsibilities. Ideally, advisers are selected through a Request for Proposal (RFP) process that demonstrates prudent fiduciary oversight, strengthens decision-making, and carefully documents the steps taken. RFP processes sometimes become protracted and unwieldy and this edition of ClearView Insights summarizes best practices to assist fiduciaries in creating a process that is efficient, fair and timely.

Investment Peer Analysis – A Definitive “Best Practice”

Peer analysis is common across many sectors and widely used by larger nonprofits and universities in benchmarking their investment performance. We estimate that such analysis is employed by less than 20% of smaller institutions, however, and our research indicates that more than two-thirds of such organizations underperform their market benchmarks. As a result, most are unable to sustain the inflation-adjusted value of their investment portfolios over time. This edition of ClearView Insights describes how peer analysis can supplement other essential tools in helping fiduciaries strengthen decision-making and investment outcomes.

Investment Policy for Foundations, Endowments and Not-For- Profits (Part I)

Creating a sound governance structure for an institution’s financial assets is among the most important legacies that governing boards can leave for the organizations they serve. Fiduciaries have an obligation to establish an Investment Policy that is consistent with the perpetual nature of institutional portfolios. For boards considering the adoption or modification of such a policy, this edition of ClearView Insights lays out both key issues that should be considered and pitfalls that can be avoided through consistent focus on a long-term investment horizon.

Investment Policy for Foundations, Endowments and Not-For- Profits (Part II)

Part I of “Investment Policy for Foundations, Endowments and Not-For-Profits” provided an overview of the key issues that should be considered by fiduciaries in constructing an investment policy. This edition of ClearView Insights provides a more detailed discussion of some of the key “best practice” building blocks that are necessary to construct a sound Investment Policy Statement. Included are overviews of Time Horizon, Investment Objectives, Spending Policy, and Risk Management.