COMMUNITY FOUNDATIONS: HOW TO MAKE THE MOST OF YOUR INSTITUTIONAL INVESTMENT ADVISOR

As the leader of a community foundation, you face increased pressure in today’s rapidly changing world. Demographics are changing as trusted donors pass on assets to the next generation, the cost of keeping your doors open continues to increase, and you may experience mounting pressure to adopt socially responsible investment strategies, commonly known as ESG, that align with your mission.

To meet these challenges, your foundation needs to view your institutional investment consultant as more than someone who merely watches returns. Why? Your organization’s finances and ability to aspire beyond its mission depend on more than investment performance alone.  

Here are four solutions your fiduciary advisor should be helping you with now:

Streamline Your Investment Management
Does your community foundation have more than one investment portfolio allocated with an individual broker or bank? If so, you may be paying hidden or high fees, as investments in this structure could be invested in high cost mutual funds. Partnering with an independent and objective investment advisor could optimize performance and reduce fees. In addition, reporting and transparency could become clearer, something increasingly expected by donors and board members. Clearstead creates an oversight dashboard that outlines everything we plan to do throughout the year, so you clearly understand the process and know you are fulfilling fiduciary obligations.

Adopt Spending and Governance Policies to Guide Decision-Making
What should your investment consultant be speaking about at committee meetings? At Clearstead, we can discuss the pros and cons of the myriad spending policies available and how each one relates to a foundation, or how to build out an organization’s governance structure to ensure adequate resources are given to critical items such as donor relations. We customize reporting for you, offer a transparent fee structure, and guide your organization using best practices across all our institutional clients. Then, we craft robust, customized spending and governance policies to intelligently guide day-to-day practices. Read more about the importance of fee transparency here.

Learn More About ‘Responsible Investing’ Strategies (also known as ESG and/or Impact Investing)
Should your foundation be investing in companies that align with your mission and values? The term Impact Investing has taken community foundations by storm and can be defined differently by each organization and takes careful and thoughtful discussion before implementation. Clearstead’s 30 years of experience in working with Foundations allows us to guide this discussion in an appropriate fiduciary manner. Our Responsible Investing solutions help foundations take the first step by objectively learning more. Last month, Clearstead hosted a ClearPoint Roundtable on the ESG trend. A key question that was posed: does ESG investing mean performance will suffer? According to industry professionals, the answer is not straightforward. Read more insights from our Roundtable here.

Leverage Your Investment Consultant to Connect with More Donors
Do you think your largest benefactors want to know their donation dollars are in the hands of competent stewards? Clearstead institutional advisors could meet with prospective or current donors – either individually or in a group – to communicate, among other items, the Foundation’s portfolio strategy, performance benchmarks, and asset allocation structure. Partnering with an investment consultant focused on the institutions they serve strengthens the credibility of the Foundation and allows for more robust donor discussions on how to improve the community in which they live.