Financial guidance for ENDOWMENTS
Nonprofit organizations face significant challenges in today’s world, from lower revenues and donations to increased market volatility. Understanding the nuanced needs of those we serve, our team holds in-depth discussions to help clients build out a spending policy that balances competing goals – funding the annual operating budget while positioning assets to preserve future purchasing power.
Our team works with endowments, foundations, charitable gift annuities, charitable remainder trusts and nonprofits to help them better utilize their investment portfolios in today’s often unpredictable financial environment.
Through the institutional experience of our team members and the deep resources available at Raymond James, we are able to help clients make thoughtful decisions on key topics such as roles and responsibilities, asset allocation decisions, investment selection and monitoring criteria, rebalancing procedures and fee disclosure.
The Mahoney Group also has the capabilities to perform active risk-budgeting analysis, conduct investment manager searches, monitor portfolio performance, evaluate tactical investment decisions made by managers and help rebalance the portfolio back to target allocations.
*Investing involves risk including the possible loss of principal. There is no assurance that any investment strategy will be successful. Asset allocation and diversification do not ensure a profit or protect against a loss.
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This is a fictional case study intended to showcase the actions, advice and services that The Mahoney Group can provide endowments. Any similarity to actual organizations is entirely coincidental.
The patriarch of a $20 million private family foundation tasked with providing college scholarships to underprivileged high school students in the community came to us with his concerns. He felt that the foundation lacked structure and discipline; he worried about the future of the foundation when he passed away or became incapacitated.
Without the proper structure, the further removed the foundation gets from its original person and purpose, the harder it becomes to be sustained. At this stage, the founder’s heirs had no training on how to run a foundation, and many of the board members were volunteers who lacked sufficient knowledge of the fiduciary responsibilities involved.
To give the foundation the necessary structure, we drafted a charter to delineate the roles and responsibilities of each member of the organization. To create good governance, we reviewed its investment policy and spending policy, and did a cost analysis. We also implemented an education program for its board and committee members, outlining its fiduciary obligations and the correct way to use the Investment Policy Statement (IPS).
We discussed how the fees worked and how they should be managed, and how to use time and talent to keep themselves and their organization out of legal trouble caused by lack of proper fiduciary oversight.
To help the foundation with its goal of generating enough capital each year to fulfill its scholarship awards while maintaining its long-term sustainability, we took a careful look at its investment program, portfolio, asset allocation, investment managers and fees and made what we felt were the appropriate recommendations. We then monitored the investment program on an ongoing basis to respond to market conditions or make necessary adjustments.
We are dedicated to serving as proactive investment consultants to private family foundations, hospital foundations, university endowments and other nonprofits, applying our specialized industry knowledge to helping them fulfill their worthy missions.
This investment profile is hypothetical and not indicative of any specific situations or clients. It is presented only as an example and not intended as investment advice. There is no assurance that any investment strategy will be successful. Investing involves risk and investors may incur a profit or a loss. Asset allocation and diversification do not ensure a profit or protect against a loss.
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