Authors: Grant Guyuron, CFA, Senior Managing Director and Anna Rathbun, CFA, CAIA, Director, Research

Overview:

 

Investments of an operating non-profit should not be invested in a vacuum. Our operating non-profit clients (colleges and universities, and hospitals, primarily) have a variety of investments – balance sheet assets, endowment and foundation assets, retirement plans, and self-insurance pools – invested in marketable and illiquid strategies. These assets are managed according to policies that set forth guidelines for asset allocation and selection of investments. Yet in addition to investment assets, and an organization’s concern that they are managed properly, operating nonprofits also have financial priorities such as cash flow and balance sheet debt. Market volatility can affect both investment assets and financial priorities, so it is imperative that trustees, staff, and advisors understand the relationship between an organization’s finances and investments, and the sensitivity to market volatility. Investment policy must be integrated with financial priorities, especially its liquidity needs, debt covenants, and other financial considerations.

This article shows the importance of integrating investments with financial priorities. It describes several ways markets affect finances and provides an example of how financial modeling can help explain the relationship between investments and finances.

To read this full whitepaper, click below:

September 2019 Whitepaper

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We bring our clients objective financial leadership through our fee-only advisory model, which enables us to remain objective. We do not offer proprietary products and take no commissions from product sales: our only source of revenue is fees we receive for financial advice. True to our founding principles, we do the hard work: the day-to-day investment management integrated with organizational priorities and family aspirations.

Clearstead is an institutional and private client advisory firm that is relentless in providing solutions so our clients can exceed their aspirations and build stronger legacies for their families, their communities, and themselves.

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