One of the responsibilities of a nonprofit’s board is to manage the organization’s assets prudently. Unless you have someone on staff with significant investment expertise, partnering with nonprofit investment advisors is a prudent decision.
Advisors should provide trusted guidance and manage your organization's assets to meet your investment goals. Consider hiring an advisor dedicated to working with nonprofit organizations and offering a holistic approach beyond investment management, providing specialized services to help you succeed.
The table below compares different approaches to managing nonprofit investment programs: Self-Managed, Typical Financial Advisor, and eCIO Investment Advisor.
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Oversee Assets as a Fiduciary
Acting in a fiduciary capacity means putting the organization's interests ahead of your own which ensures the organization is well served.
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| Self-Managed |
Typical Financial Advisor |
eCIO Investment Advisor |
Board and board members assume all fiduciary responsibilities and liabilities
It may be difficult to reach a consensus on key aspects of your investment program |
Some financial advisors may act in a fiduciary capacity, others may not
A ‘suitability obligation’ does not meet the same requirements as a ‘fiduciary standard’ |
eCIO is a fiduciary advisor and always acts in a fiduciary capacity
eCIO recommends specific best practices to guide boards toward strong consensus decisions |
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Assess Organization’s Needs
Purpose, risk tolerance, and time horizon are key factors in determining asset allocation and investment policy.
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| Self-Managed |
Typical Financial Advisor |
eCIO Investment Advisor |
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Determined by the board
Influenced by composition and individual views of the membership
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Often applies a personal wealth management focus to institutional clients
Utilizes standard risk/return profiles
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Leads a rigorous group risk assessment for boards and committees through a formal survey
Quantifies organization-specific risk, time horizon, and spending parameters
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Design Asset Allocation
Asset allocation is critical and typically drives the vast majority of your investment return.
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| Self-Managed |
Typical Financial Advisor |
eCIO Investment Advisor |
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May be influenced by members’ personal wealth portfolios and outlooks
Lack of data and tools to model asset allocation scenarios
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Typically chooses from off-the-shelf models
Frequently has limited ability to customize the asset allocation
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Builds a fully customized asset allocation based on risk assessment
Models client-specific asset allocation with both historical data and forward return projections
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Establish Investment Policy
A formal Investment Policy Statement (IPS) is critical to a well-run investment program.
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| Self-Managed |
Typical Financial Advisor |
eCIO Investment Advisor |
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A formal Investment Policy Statement is often missing
It may not be up-to-date or reviewed on a consistent basis
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Generally offers a canned Investment Policy Statement
Frequently lacks a review of the goals and performance of investments to ensure needs are met
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Designs a customized Investment Policy Statement that outlines clear oversight and succession
Regularly reviews and updates the IPS to ensure relevance and that performance of investments and goals are in line
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Select Portfolio Investments
Low-cost, diversified investment options drive a successful investment program.
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| Self-Managed |
Typical Financial Advisor |
eCIO Investment Advisor |
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Based upon individual board member experience and knowledge
Access to limited investment research tools and due diligence process
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May lack access to institutional-quality investment options
Selection process may be biased toward firm-sponsored investments
While investments may be “suitable” they may not meet the fiduciary standard
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Adheres to a research and selection process focused primarily on institutional investment options
Seeks the most cost-effective investment strategies
100% independent in selecting investment strategies
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Report to the Board
Your board should be well-informed on investment program performance to ensure members are fulfilling their fiduciary duty.
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| Self-Managed |
Typical Financial Advisor |
eCIO Investment Advisor |
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Typically only custodial statements are sent to staff and select board members
May not have necessary resources to create investment performance reports
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May lack performance reporting and appropriate benchmark comparisons
Often provides reports designed for wealth management portfolios and/or are difficult to understand
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Provides quarterly video-based institutional account reporting via a user-friendly portal
Evaluates account performance with appropriate benchmarking
Offers dedicated nonprofit investment advisors for consultation to the board
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