Effective Endowment Governance: What Savvy Nonprofits Are Doing



In this paper, we share some useful pointers on governance to help nonprofits enhance oversight of their investment portfolios and perform this role with distinction. Our comments are based on participating in hundreds of meetings with nonprofit Investment Committees who oversee portfolios ranging from $25 million to over$1 billion. From these meetings, we have developed a keen appreciation for governance “best practices organizations fulfill critical roles in our communities. Therefore, protecting endowments to support program spending is an absolute operational imperative. Additionally, increasingly dynamic global capital markets and more complex investment strategies make endowment management more challenging than ever. Accordingly, savvy nonprofits recognize the need to strengthen endowment governance to mitigate drawdown—the permanent loss of endowment capital—from a dramatically risky investment world.

Ultimately, every nonprofit Board has a fiduciary responsibility to manage endowment assets prudently, so regardless of whether a nonprofit self-invests or utilizes outside advisors, proper governance principles help ensure Board alignment with state and national regulatory expectations (i.e. Uniform Prudent Management of Institutional Funds Act1).

We believe that the “Endowment Model”—a collection of investable assets diversified across different global asset classes to meet the intersection of a nonprofit’s spending needs, risk, and return objectives—remains the optimum strategic construct to invest. Its application alone does not assure successful outcomes. We contend that sound endowment governance practiced by nonprofit Boards shares equal importance with asset allocation and investment selection.

Below we provide several ideas to help Boards practice “governance with distinction” with particular emphasis on the roles, responsibilities, and best practices.


This communication is intended solely to provide general information. The information and opinions stated may change without notice. The information and opinions do not represent a complete analysis of every material fact regarding any market, industry, sector or security. Statements of fact have been obtained from sources deemed reliable, but no representation is made as to their completeness or accuracy. The opinions expressed are not intended as individual investment, tax or estate planning advice or as a recommendation of any particular security, strategy or investment product. Please consult your personal advisor to determine whether this information may be appropriate for you. This information is provided solely for insight into our general management philosophy and process. Historical performance does not guarantee future results and results may differ over future time periods.

IRS Circular 230 Notice: Pursuant to relevant U.S. Treasury regulations, we inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. You should seek advice based on your particular circumstances from your tax advisor.


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