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Nonprofits reviewing investment management

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Charitable foundations and endowments are assessing the overall process for managing their investments in the face of ongoing volatility in the capital markets, a new poll says.

Among 160 U.S.-based nonprofits polled by SEI, none of them SEI clients, 31 percent of those using consultants to manage their investments said they were looking at other options

Forty-five percent said consultants should have been more proactive in communicating during the recent market turmoil, and 30 percent said a top priority was defining the investment-management fiduciary responsibilities for trustees and investment consultants.

“For many nonprofits, the wheels came off the entire process and they are seriously considering if their current approach to investment management is the best approach moving forward,” Carolyn McLaurin, vice president and managing director of SEI’s nonprofit group, says in a statement.

Of nonprofit polled, 81 percent said their overall invested assets fell by at least 21 percent, and 45 percent of those polls said the recession had led forced them to choose between reducing staff and cutting programs.

Seventy-one percent said they were making asset-allocation changes to respond to the recession; 56 percent were reducing allocations to U.S. equities; 63 percent were reducing allocations to foreign equities; and 58 percent were reducing allocations to hedge funds.

And 69 percent said they were increasing allocations to fixed income, 67 percent they were increasing allocations to other alternatives, while 63 percent said a top priority was maintaining an appropriate level of liquidity in their investment portfolio.

“As nonprofits determine strategies for addressing a wide range of issues, the external help they receive needs to be aligned with their efforts,” McLaurin says. “Many are realizing this wasn’t always the case.”

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