Commonfund Institute

Governance Best Practices: How Does Your Board Measure Up?

Posted by Commonfund Institute on Jan 11, 2018

Topic: Governance and Policy | Industry Knowledge

Since our founding in 1971, a core element of the Commonfund mission has been to provide insights on a broad range of governance, policy and investment challenges. An engaged governing board is important in all environments – but perhaps no more so than today. Markets are at new highs, yet there remains much uncertainty – from the inevitable market correction to disruption of many nonprofit operating models to the impact of recently enacted tax law changes. As we start 2018, Commonfund Institute convened a panel of thought leaders to discuss current practices in nonprofit governance and offer ways for boards to bring best practices to their processes and deliberations. The discussion was moderated by John S. Griswold, Founding Director of the Institute. The three panelists were: Thomas K. Hyatt, partner in the Washington office of Dentons US LLPand co-chair of the firm’s U.S. Nonprofit Entities Practice. He is a Senior Fellow for Public Policy at the Association of Governing Boards of Universities and Colleges (AGB) and was recognized as Outstanding Nonprofit Lawyer of the Year for 2017 by the American Bar Association. Robert B. Litterman, PhD., Chair of the Risk Committee and a founding partner of Kepos Capital, a New York City-based systematic global macro investment firm. In a 23-year career with Goldman Sachs he headed the firm’s risk management function and co-developed the Black-Litterman Global Asset Allocation Model, a mathematical model for portfolio allocation. He is Chair of the Board of Trustees of Commonfund, and serves on other boards, including the World Wildlife Fund and the Robert Wood Johnson Foundation. David Nygren, PhD., founder of Nygren Consulting and previously founding Senior Partner of the Corporate Governance Consulting Group at Mercer Delta Consulting. Formerly, he was Executive Vice President of DePaul University and has held teaching and research appointments at Harvard, Yale and Boston University. He has served on or chaired the boards of numerous organizations in education, health care and the arts.

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The Investment Policy Statement

Posted by John Griswold, Commonfund Institute on Dec 9, 2016

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

Successful investing for long-term funds requires a strategic plan. This is true despite – indeed, because of – the fact that the future is unknowable. The plan must be specific, embodying in concrete terms the best thinking of the board of trustees about the investment pool, its goals and purposes; but it also needs to be sufficiently flexible to guide the board through environments that may be very different from those prevailing at the time of its adoption.

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Understanding the Cost of Investment Management

Posted by Commonfund Institute on Oct 16, 2015

Topic: Governance and Policy | Industry Knowledge

Few aspects of financial management are more important for fiduciaries than an understanding of the cost if investment management of the perpetual funds for which they have responsibility. Our aim is to guide fiduciaries as they strive to fulfill their duties under common and statutory law.

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Legislating the Normative Environment: Nonprofit Governance, Sarbanes-Oxley and UPMIFA

Posted by Commonfund Institute on May 19, 2015

Topic: Governance and Policy

Regulation of nonprofit investment and governance practices has migrated from traditional common-law principles to codified statutory law, affecting areas of nonprofit governance not addressed in the original legislation. Trustees will do well to heed this development. This paper seeks to draw attention to recent shifts in the law and its implications, and to trace a transformation in thinking that has gained momentum in recent years.

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Viewpoint: Changing our Minds

Posted by Commonfund Institute on Jan 12, 2015

Topic: Governance and Policy | Industry Knowledge

It is often said that we live in a world of change, but it is surprising how slowly that change can occur. Seven years after the onset of the Great Recession, many business school students are still taught that portfolio volatility is a suitable proxy for risk. In an encouraging contrast, however, this year’s NCSE data show that endowment fiduciaries at educational institutions are increasingly—and meaningfully—assimilating new practices in measuring and overseeing risk, taking steps to acknowledge and understand it in its various forms.

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Viewpoint: Alphabet Soup – Responsible Investing

Posted by Commonfund Institute on Oct 12, 2014

Topic: Governance and Policy | Industry Knowledge | Responsible Investing

Responsible investing has been used as an umbrella term that includes some investment practices of long standing and some that are relatively new arrivals. Simple, clear definitions of responsible investing practices are not difficult to find; here are the ones...

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Greenhouse effect

Posted by Commonfund Institute on Aug 17, 2014

Topic: Industry Knowledge | Risk Management

In the last five years, as world markets have recovered from the global financial crisis, institutional portfolio returns have generally been strong. While many factors have played a part in this scenario, historically low interest rates and accommodative monetary policies on the part of the Federal Reserve and the European Central Bank—an artificial environment like that of a greenhouse—are among the main causes for the high equity market returns of the last few years.

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Viewpoint: Looking Modern and Sharpe

Posted by Commonfund Institute on Jul 7, 2014

Topic: Governance and Policy | Industry Knowledge | Risk Management

Every fiduciary knows that risk-taking is an unavoidable part of investing. But how can fiduciaries think usefully about risk in the context of their role as guardians of their institutions’ funds? This question is particularly urgent in the current financial and economic environment, which since early 2009 has been strongly influenced by the policies of the leading central banks, notably the Federal Reserve. The banks’ policies of keeping interest rates extremely low and providing liquidity to the market have supported a broad resurgence in public equity prices in the U.S. and Japan. Although the recovery has seen some pauses and retrenchments as each market has reacted in its own way to the central banks’ policies, the overall direction of prices has been strongly upward.

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Assessing Your Board’s Risk Tolerance

Posted by John Griswold, Commonfund Institute on Jun 2, 2014

Topic: Governance and Policy | Industry Knowledge | Investment Strategy | Risk Management

In the wake of the financial crisis, trustees of many endowed nonprofit institutions realized that their portfolio was riskier than they thought and their own ability to tolerate loss wasn’t as strong as they imagined. What can board and investment committee members do to improve their ability to assess their risk tolerance?

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Strive for the Best: Building and Maintaining an Excellent Board

Posted by John Griswold, Commonfund Institute on May 19, 2014

Topic: Governance and Policy

Excellent boards are made, not born. Achieving excellence in board governance requires success in four crucial areas: capable leadership; sound organizational structure; attention to fiduciary duties; and a culture that creates a cohesive board.

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Viewpoint: Looking Modern and Sharpe – Study of Endowments

Posted by Commonfund Institute on Jan 12, 2014

Topic: Governance and Policy | Industry Knowledge | Risk Management

Every fiduciary knows that risk-taking is an unavoidable part of investing. But how can fiduciaries think usefully about risk in the context of their role as guardians of their institutions’ funds? This question is particularly urgent in the current financial and economic environment, which since early 2009 has been strongly influenced by the policies of the leading central banks, notably the Federal Reserve. The banks’ policies of keeping interest rates extremely low and providing liquidity to the market have supported a broad resurgence in public equity prices in the U.S. and Japan. Although the recovery has seen some pauses and retrenchments as each market has reacted in its own way to the central banks’ policies, the overall direction of prices has been strongly upward.

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10 Point Checklist to Get Governance Right

Posted by Tom Hyatt, Commonfund Institute on Oct 1, 2013

Topic: Governance and Policy | Industry Knowledge

While governance has many facets that can make it daunting to navigate, trustees may want to start with this 10-point checklist.

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From SRI to ESG: The Changing World of Responsible Investing

Posted by John Griswold, Commonfund Institute on Sep 19, 2013

Topic: Responsible Investing

Thoughtful investment professionals continue to debate whether a portfolio’s long-term performance can be enhanced by including environmental, social and governance (ESG) considerations in the security selection process, but responsible investing is more than a passing trend. Long-term fiduciaries should educate themselves on the fundamental arguments for and against ESG, and think critically about its meaning for the institutions they serve.

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10-Point Checklist: Get Governance Right

Posted by Tom Hyatt, Commonfund Institute on Aug 12, 2013

Topic: Governance and Policy

Follow this 10-point governance checklist to address the topics your board is accountable for....

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