Commonfund Institute

Viewpoint: Responsible Investing – Read All About It

Posted by Commonfund Institute on Aug 10, 2018

Topic: Industry Knowledge | Investment Strategy | Responsible Investing

The new and newsworthy in this year’s Council on Foundations–Commonfund Study of Investment of Endowments for Private and Community Foundations® (CCSF) is headlined by responsible investing. No other area of inquiry showed as much year-over-year change or as much change over the past few Studies; to be clear, the changes would not be considered dramatic, but they are consistent and the trend line is easily discernible.

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2017 CCSF Study Results Released

Posted by Commonfund Institute on Aug 9, 2018

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

Data gathered in the 2017 Council on Foundations–Commonfund Study of Investment of Endowments for Private and Community Foundations® (CCSF) show that participating private and community foundations realized significantly higher investment returns for the 2017 fiscal year (January 1 – December 31, 2017) than they did in FY2016. Participating private foundations reported an average FY2017 return of 15.0 percent compared with 6.4 percent in FY2016. Participating community foundations reported an average return of 15.1 percent for FY2017, up from 7.3 percent in FY2016.

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What are the Differences Between SRI and ESG?

Posted by Commonfund Institute on Jun 19, 2018

Topic: Industry Knowledge | Investment Strategy | Responsible Investing

There are many terms referring in some way to practices related to responsible investing: socially responsible investing; mission-related investing; impact investing; integrated reporting; and investing according to environmental, social and governance principles. These terms are often grouped under the same category of responsible investing, but this generalization is misleading..

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Diversity and Emerging Managers

Posted by Commonfund Institute on May 21, 2018

Topic: Asset Allocation | Industry Knowledge | Investment Strategy | Responsible Investing

The benefits of diversity are widely recognized in the work place and among educational institutions and other nonprofits. Yet, the concept of investment management firms that are minority owned and operated lags, partly because of the challenge of attracting investors’ capital . . .

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Are You Eligible to Attend?

Posted by Commonfund Institute on May 15, 2018

Topic: Industry Knowledge

Commonfund Institute is an intensive week-long, classroom-based program held exclusively for senior representatives of qualified institutional investors. (formerly called the Endowment Institute)

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ESG Investing Becomes Mainstream

Posted by Commonfund Institute on May 4, 2018

Topic: Asset Allocation | Industry Knowledge | Investment Strategy | Responsible Investing

Can a sustainability strategy be tied to better financial outcomes? The subject of ESG, or investing in accord with environmental, social and governance principles, arose in several sessions at Commonfund Forum 2018. One session, in particular, was devoted to the ongoing evolution of responsible investing, with a focus on ESG.

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Private Capital: Key to Unlocking Growth in Emerging Markets

Posted by Commonfund Institute on Apr 25, 2018

Topic: Industry Knowledge | Investment Strategy | Market Commentary | Private Capital

After a turbulent period, emerging markets have delivered double-digit returns in recent years. Private investments in emerging markets offer a way to diversify beyond the public markets and, in general, have also been a source of strong returns...

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10 Key Takeaways from
Commonfund Forum 2018

Posted by Commonfund Institute on Apr 2, 2018

Topic: Industry Knowledge | Investment Strategy | Market Commentary

Commonfund recently hosted its 20th annual Commonfund Forum in Orlando, Florida. The event brought together 400 institutional investors from the U.S., Puerto Rico, the Virgin Islands, Canada, Chile and the United Kingdom in a 2.5 day conference. Sessions explored cyclical and tactical investment trends and, importantly, strategies to help institutions support their missions. More than 60 experts from investment firms, academia, public policy and think tanks convened in general sessions, major addresses and breakout sessions. Here are 10 key takeaways from Commonfund Forum 2018.

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Forum 2018 Attendee Stats [Infographic]

Posted by Commonfund Institute on Mar 28, 2018

Topic: Industry Knowledge

We recently hosted our 20th annual Commonfund Forum in Orlando Florida. The event brought together institutional investors to engage in a two-day conference to explore cyclical trends and tactical opportunities that can help support the missions of their institutions.

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2017 NCSE Key Findings [Infographic]

Posted by Commonfund Institute on Mar 6, 2018

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

For the fiscal year ended June 30, 2017, educational endowments reported a 12.2 percent return as the 10-Year return fell to 4.6 percent. In this infographic, we report the top findings from the 2017 NACUBO-Commonfund Study of Endowments. This annual report studies, on average, over 800 educational institutions that include U.S. educational institutions, private colleges and university endowments, public educational endowments, institution-related foundations (IRFs) and combined public endowment/foundations.

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Viewpoint:
Being Objective

Posted by Commonfund Institute on Feb 22, 2018

Topic: Governance and Policy | Industry Knowledge

Every year, the NACUBO-Commonfund Study of Endowments® (NCSE) reports new data—on investment returns, asset allocation, risk management, donations and gifts, and much more. But some data points are relatively static. In this Viewpoint we will dive deeper into long-term return objectives and the investment policies that support the objectives of the endowment.

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Despite Strong FY2017, Endowments Report Decline in Ten-Year Return

Posted by Commonfund Institute on Jan 25, 2018

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

Data gathered from 809 U.S. colleges and universities for the 2017 NACUBO-Commonfund Study of Endowments® (NCSE) show that participating institutions’ endowments returned an average of 12.2 percent (net of fees) for the 2017 fiscal year (July 1, 2016 – June 30, 2017) compared with -1.9 percent for the 2016 fiscal year and 2.4 percent for fiscal 2015. Despite this year’s improved return, the mission-critical 10-year average annual return fell to 4.6 percent from last year’s 5.0 percent, as FY2007’s strong 17.2 percent return dropped out of the trailing 10-year average.

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2017 NACUBO-Commonfund Study of Endowments Results Released

Posted by Commonfund Institute on Jan 25, 2018

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

Data gathered from 809 U.S. colleges and universities for the 2017 NACUBO-Commonfund Study of Endowments® (NCSE) show that participating institutions’ endowments returned an average of 12.2 percent (net of fees) for the 2017 fiscal year (July 1, 2016 – June 30, 2017) compared with -1.9 percent for the 2016 fiscal year and 2.4 percent for fiscal 2015. Despite this year’s improved return, the mission-critical 10-year average annual return fell to 4.6 percent from last year’s 5.0 percent, as FY2007’s strong 17.2 percent return dropped out of the trailing 10-year average.

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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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Never Enough: Challenges Facing Private Colleges

Posted by Commonfund Institute on Sep 14, 2017

Topic: Governance and Policy | Industry Knowledge | Operating Assets

The traditional small, private, liberal arts college model of higher education has been under stress for some time. Viewed as economic entities, these institutions — like their larger peers, the research universities — rely on three main sources of income: tuition, fees and grants, and distributions from their endowments. Unlike research universities, however, small liberal arts colleges are facing a unique combination of headwinds that deeply challenge their operational model and may, in many cases, pose threats to their continued existence. In this article, we describe those challenges and outline some steps that governing boards and administrations may have to take in order to ensure the survival of their institutions.

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A Primer on Outsourced Investment Management

Posted by Commonfund Institute on Aug 31, 2017

Topic: Industry Knowledge | Investment Strategy | Outsourced Investing

Once seen primarily as a solution for small institutions with limited resources, outsourced investment management is now widespread, with a broad range of long-term investors – including those with more substantial investable asset pools – turning to the outsourced chief investment officer model. Properly implemented, outsourcing can help institutions to address portfolio complexity and risk management challenges, speed decision-making and contend with an increasingly rigorous regulatory environment, while enabling trustees to focus on improving institutional governance.

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Outsourced Investment Management: An Overview for Institutional Decision-makers

Posted by Commonfund Institute on Aug 19, 2017

Topic: Outsourced Investing

Once seen primarily as a solution for small institutions with limited resources, outsourcing of the investment management function is now widespread, with a broad range of long-term investors turning to the outsourced chief investment officer model. Properly implemented, outsourcing can help institutions with both large and small asset pools to address portfolio complexity and risk management challenges, benefit from more timely decision-making and contend with an increasingly rigorous regulatory environment, while enabling trustees to focus on improving institutional governance.

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2016 CCSF Key Findings [Infographic]

Posted by Commonfund Institute on Aug 14, 2017

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

For the fiscal year ended December 30, 2016, participating private foundations reported an average return of 6.4 percent while participating community foundations reported an average return of 7.3 percent for the same period. In this infographic, we report the top findings from the 2016 Council on Foundations-Commonfund Study of Foundations. This annual report studies, on average, over 200 private and community foundations that represent over $100 billion in assets.

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Viewpoint: Increased Responsibility

Posted by Commonfund Institute on Aug 8, 2017

Topic: Governance and Policy | Industry Knowledge | Responsible Investing

In recent years, growing attention has been paid to the use by endowed institutions of so-called responsible investing practices. The three main practices — environmental, social and governance (ESG) investing; socially responsible investing (SRI); and impact investing (also known as mission-related investing or MRI) — are defined in this article.

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2016 CCSF Study Results Released

Posted by Commonfund Institute on Jul 14, 2017

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

Data gathered in the 2016 Council on Foundations–Commonfund Study of Investment of Endowments for Private and Community Foundations® (CCSF) show that participating private foundations reported an average return of 6.4 percent for the 2016 fiscal year (January 1 – December 31, 2016) while participating community foundations reported an average return of 7.3 percent for the same period.

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Implications of New York’s Excelsior Scholarship Program

Posted by Commonfund Institute on Jun 6, 2017

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

While opening opportunity to many New York families, the recently enacted Excelsior Scholarship Program will likely stress the financial resources of small private colleges and universities in New York State, particularly those with a high percentage of state resident students, modest endowments and high tuition discount rates. With revenues from tuitions facing pressure, the importance of endowment in support of operating budgets and scholarships will increase.

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2016 NCSE Key Findings [Infographic]

Posted by Commonfund Institute on Apr 20, 2017

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

For the fiscal year ended June 30, 2016, educational endowments reported a -1.9 percent return as the 10-Year return fell to 5.0 percent. In this infographic, we report the top findings from the 2016 NACUBO-Commonfund Study of Endowments. This annual report studies, on average, over 800 educational institutions that include U.S. educational institutions, private colleges and university endowments, public educational endowments, institution-related foundations (IRFs) and combined public endowment/foundations.

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Forum 2017 Attendee Statistics [Infographic]

Posted by Commonfund Institute on Apr 7, 2017

Topic: Industry Knowledge

We recently hosted our 19th annual Commonfund Forum in San Antonio Texas. The event brought together institutional investors to engage in a three-day conference to explore cyclical trends and tactical opportunities that can help support the missions of their institutions.

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Viewpoint:
Counting the Cost

Posted by Commonfund Institute on Mar 30, 2017

Topic: Governance and Policy | Industry Knowledge

How much does investment management cost? Fiduciaries, donors and stakeholders at endowed institutions have a strong interest in finding a good answer to this question, particularly in this era of low returns when costs may occupy a comparatively large proportion of the total return percentage. But achieving that goal is harder than it seems. In our white paper of 2015, “Understanding the Cost of Investment Management,” we outlined the types of cost that institutions pay— including those that are not specifically invoiced, and of which many fiduciaries may be unaware. This year, we enlisted the aid of institutions participating in the NCSE to dig more deeply into one of the main factors that influence investment cost: the investment vehicles employed in managing the portfolio.

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10 Key Takeaways from
Commonfund Forum 2017

Posted by Commonfund Institute on Mar 29, 2017

Topic: Industry Knowledge | Investment Strategy | Market Commentary

Commonfund recently hosted its 19th annual Commonfund Forum in San Antonio Texas. The event brought together about 450 institutional investors from the U.S, Puerto Rico and Canada to engage in a 3-day conference to explore cyclical trends and tactical opportunities that can help support the missions of their institutions. More than 60 experts in academia, public policy and government convened in General Sessions, Major Addresses and Breakout sessions. Here are 10 key takeaways from Commonfund Forum 2017.

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National Carbon Pricing Webinar

Posted by Commonfund Institute on Mar 28, 2017

Topic: Industry Knowledge | Responsible Investing

The Bard Center for Environmental Policy and the #PutAPriceOnIt campaign will host a national webinar April 5th at 7 pm ET, on carbon pricing for colleges, universities, and community groups. Schools and organizations across the U.S. are invited to participate in this event, which includes a free screening of the Years of Living Dangerously episode “Priceless,” followed by an expert panel discussion.

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Constraints Faced by Healthcare Endowments

Posted by Commonfund Institute on Feb 17, 2017

Topic: Asset Allocation | Industry Knowledge

As a result of the evolving landscape of the healthcare industry, organizations are increasingly being shaped by pressures affecting both the revenue and expense sides of the income statement.

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2016 NACUBO-Commonfund Study of Endowments Results Released

Posted by Commonfund Institute on Jan 31, 2017

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

Data gathered from 805 U.S. colleges and universities for the 2016 NACUBO-Commonfund Study of Endowments® (NCSE) show that participating institutions’ endowments returned an average of -1.9 percent (net of fees) for the 2016 fiscal year (July 1, 2015 – June 30, 2016). This year’s negative return, following the low 2.4 percent return reported for FY2015, contributed to a decline in long-term 10-year average annual returns to 5.0 percent from last year’s 6.3 percent.

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Does Your Investment Policy Statement Account for Risk?

Posted by Commonfund Institute on Jan 20, 2017

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

In the past, many investment policy statements gave relatively cursory treatment to risk, its quantification and its potential impact on the asset pool. Market collapses and credit crises demonstrated that many institutions’ portfolios carried unacknowledged risks, that their risk profiles in general were higher than they thought, and that the risk tolerance of their fiduciaries was lower than acknowledged. Today, then, it is entirely appropriate to put risk at the top of the process of investment policy development.

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Healthcare Endowment Management: 3 Questions to Consider

Posted by Commonfund Institute on Jan 10, 2017

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

The healthcare business model is changing. Mounting cost pressures are forcing small and mid-sized nonprofit healthcare organizations to consider adopting endowment management practices similar to those used elsewhere in the nonprofit sector. In the face of declining reimbursement from insurance companies and governmental payers, nonprofit healthcare organizations are confronted with an unprecedented series of challenges.

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Assessing the State of Healthcare

Posted by Commonfund Institute on Jan 10, 2017

Topic: Governance and Policy | Industry Knowledge

Healthcare organizations are challenged to maintain positive operating margins in the face of declining insurance reimbursements and governmental payers.

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Drafting Your Investment Policy Statement: 10 Critical Issues

Posted by Commonfund Institute on Dec 12, 2016

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

There is no single ‘right’ investment policy statement; each institution’s board must craft a statement that responds to the needs of the institution and the preferences and risk tolerances of the trustees. Annual review of the statement by the board can help to ensure...

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The Investment Policy Statement

Posted by Commonfund Institute, John Griswold 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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Commonfund Forum: Exclusive Conference for Eligible Investors

Posted by Commonfund Institute on Nov 30, 2016

Topic: Industry Knowledge

Free to attend for qualified institutional investors, the annual Commonfund Forum is the must-attend annual conference. Hear from headline-making thought leaders on the topics that are important to your institution.

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Does Your Institution Qualify to Attend?

Posted by Commonfund Institute on Nov 30, 2016

Topic: Industry Knowledge

The annual Commonfund Forum has grown into the must-attend annual conference for institutional investors. Year after year, Commonfund Forum continues to provide institutional investors with timely information, thoughtful analysis and unique perspectives — all from recognized experts in the worlds of investment management, economics, business and finance, government, academia, and the media.

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2015 CSHO Study of Healthcare Organizations Released

Posted by Commonfund Institute on Nov 1, 2016

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

Data gathered in the 2014-2015 Commonfund Benchmarks Study of Healthcare Organizations (CSHO) reveals investment challenges facing hospitals. Participants report 4.4 percent return for FY 2014 but -1.6 percent for FY2015.

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2016 HEPI Report Released

Posted by Commonfund Institute on Oct 31, 2016

Topic: Governance and Policy | Industry Knowledge | Operating Assets

The annual Commonfund Higher Education Price Index (HEPI) report provides an analysis of HEPI and the cost factors associated with the index. Download your copy today to determine increases in funding necessary to maintain both real purchasing power and investment at your institution.

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How Does Board Structure Affect Performance

Posted by Commonfund Institute on Oct 19, 2016

Topic: Governance and Policy | Industry Knowledge

The structure of a board has an important influence on its effectiveness, and being cognizant of these matters is essential to improving a board’s performance. In this article, we'll discuss four major factors that relate to the structure and composition of effective boards.

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The Fiduciary Case for Carbon Exposure Management Now

Posted by Commonfund Institute, Jess Gaspar on Oct 18, 2016

Topic: Investment Strategy | Responsible Investing

The year 2015 featured a wealth of global warming headlines: the December Paris Agreement on climate change, the Pope’s Encyclical, the collapse of oil prices, the Obama administration’s Clean Power Plan, France’s mandatory carbon reporting and the New York Attorney General’s subpoena of Exxon Mobil. It was also the warmest year on record.

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Fiduciary Responsibility:
A Board’s Purpose and Role

Posted by Commonfund Institute on Sep 27, 2016

Topic: Governance and Policy | Industry Knowledge

Achieving excellence in board governance requires success in four crucial areas: capable leadership, a sound organizational structure, attention to fiduciary responsibility and a culture that binds the board members to each other in a cohesive unit.

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Viewpoint: A Firmer Foundation

Posted by Commonfund Institute on Sep 2, 2016

Topic: Governance and Policy | Industry Knowledge | Responsible Investing

How long is the long term? A year ago, private and community foundations appeared to many observers to have recovered from the losses suffered in the 2008–09 global financial crisis. Double-digit investment returns had been reported in every year except FY2011 and FY2014, donations to community foundations had returned to their pre-crisis levels and the investment strategies of successful foundations were once again followed closely in the financial press.

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2015 CCSF Study of Foundations Released

Posted by Commonfund Institute on Aug 23, 2016

Topic: Asset Allocation | Governance and Policy | Industry Knowledge

Data gathered in the 2015 Council on Foundations - Commonfund Study of Investment of Endowments for Private and Community Foundations (CCSF) shows Foundations' spending in support of mission holds steady, despite second year of declining investment returns.

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Five Laws that Led to Uniformity in Nonprofit Governance

Posted by Commonfund Institute on Jul 26, 2016

Topic: Governance and Policy | Industry Knowledge

As the American economy began to function on a more truly national basis in the closing decades of the nineteenth century, it became apparent that users of the legal system – including corporations, financial institutions and trustees – would benefit from a greater degree of legal uniformity in nonprofit governance among the states. At least with respect to the laws affecting investment and trust matters ...

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Responsible Investing Study of Foundations Released

Posted by Commonfund Institute on Jul 14, 2016

Topic: Governance and Policy | Investment Strategy | Responsible Investing

The Council on Foundations-Commonfund Study of Responsible Investing was issued jointly today by the two representative organizations. The study, believed to be the most comprehensive and detailed to date on the topic among private and public foundations, analyzed the policies, practices and attitudes with respect to responsible investing among 186 U.S. private and public/community foundations representing a total of $39.7 billion in endowment assets as of December 31, 2014.

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Commonfund Study of Responsible Investing: Foundations Survey

Posted by Commonfund Institute on Jul 14, 2016

Topic: Asset Allocation | Investment Strategy | Responsible Investing

The Council on Foundations - Commonfund Study of Responsible Investing for Foundations analyzes the investment management and governance practices of U.S. foundations, both private and public. Data is excerpted from the Council on Foundations - Commonfund Study of Foundations (CCSF).

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A Framework for Nonprofit Governance

Posted by Commonfund Institute on Jul 12, 2016

Topic: Governance and Policy | Industry Knowledge

Regulation of nonprofit investment and governance practices have migrated from traditional common-law principles to codified statutory law, affecting areas of nonprofit governance not addressed in the original legislation. Two important laws enacted in the last 15 years have had an impact far beyond the intent of their original authors, causing major, if little-noticed, changes in nonprofit governance; The Sarbanes-Oxley Act of 2002, and the Uniform Prudent Management of Institutional Funds Act (UPMIFA). In this newly-created “normative environment,” nonprofits can appear to be departing from best practice if they fail to comply with the standards set by these laws, even if the laws were not intended to apply directly to those situations, and boards of such institutions...

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Integration of ESG Factors in Practical Steps

Posted by Commonfund Institute on Jul 1, 2016

Topic: Asset Allocation | Governance and Policy | Investment Strategy | Responsible Investing

In the current climate of slow global economic growth and resource constraints at many institutions, integration of ESG considerations in an organization’s investment portfolio may be perceived as a luxury or an unacceptable distraction. ESG implementation does not, however, need to be an all or-nothing decision. A sliding scale of engagement is available for institutions that decide to explore ESG...

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Investment Management
Principle 7: Fiduciary Responsibilities

Posted by Commonfund Institute on Jun 16, 2016

Topic: Governance and Policy | Industry Knowledge

In this final installation of Commonfund's 7-part series of Principles of Investment Management, we will review Principle #7: Fiduciary Responsibilities. The responsibilities of those charged with oversight of a long-term investment fund such as an educational, religious or charitable endowment, foundation, hospital asset pool or pension fund differ fundamentally from those of other investment fiduciaries. It's essential to define the roles of trustees, investment officers...

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Responsible Investing for Foundations

Posted by Commonfund Institute on Jun 13, 2016

Topic: Asset Allocation | Investment Strategy | Responsible Investing

Commonfund and Council on Foundations are thrilled to announce the release of the 2016 Council on Foundations – Commonfund Study of Responsible Investing. It is the largest and most detailed survey to date on practices, policies and attitudes relating to socially-responsible investing (SRI), environmental, social and governance integration (ESG) and impact or mission-related investing (MRI) among U.S. private and public founda­tions. The Study encompasses both the policies of foundations that have adopted any of the responsible investing practices listed and the attitudes toward responsible investing of those that have not.

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Common Concerns about Responsible Investing

Posted by Commonfund Institute on Jun 6, 2016

Topic: Governance and Policy | Investment Strategy | Responsible Investing

Discussions about whether responsible investing strategies help or hurt investment performance are complicated by the fact that, there are several broad categories of responsible investing practice and they influence portfolios in different ways. Many institutions have concerns about whether and how to apply ESG investing practices to their portfolio. These reservations stem partly from their past experience with SRI and partly because ESG investing has only recently become more widespread. While there are many concerns about responsible investing, the most common concerns...

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Operating Charity Implements Risk-Based Investment Policy

Posted by Commonfund Institute on May 31, 2016

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

Operating charity in the Northeast is in the process of implementing a risk-based investment policy for its $30 million endowment. The seven-member investment committee is comprised of individuals with experience at leading securities and investment firms. In drafting its IPS, the committee created a separate section entitled "Risk Tolerance"...

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Striking the Balance: A Fiduciary Approach to Risk and Investment Policy

Posted by Commonfund Institute on May 31, 2016

Topic: Asset Allocation | Governance and Policy | Investment Strategy | Risk Management

In formulating an investment policy, fiduciaries frequently treat risk as an output of portfolio construction and asset allocation processes, giving priority to return objectives. Fiduciaries would do better to acknowledge risk as a primary input which guides and constrains those charged with institutional governance and investment policy formulation. Download this paper to help determine practical methods to assign risk when formulating an investment policy for your institution.

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Investment Management
Principle 6: Cost Management

Posted by Commonfund Institute on May 24, 2016

Topic: Governance and Policy | Industry Knowledge

In this installation of Commonfund's 7-part series of Principles of Investment Management, we will review Principle #6: Cost Management. The costs of your investment program can quietly undercut returns; make sure you keep those costs reasonable in relation to the returns you expect to receive. The investment management function requires a deliberate commitment to cost management. Cost control essentially involves three types of activity...

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Deciding on an OCIO Provider: Three Factors to Consider

Posted by Commonfund Institute on May 17, 2016

Topic: Governance and Policy | Industry Knowledge | Investment Strategy | Outsourced Investing

One of the most important aspects of the success of an organization’s OCIO model is defining the respective roles and responsibilities of the institution’s board, staff, investment committee and the outsourced CIO. Investment committees should think carefully about the institution’s ultimate goals in order to articulate objectives that are understandable and clear.

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Responsible Investing:
Terminology and Background

Posted by Commonfund Institute on May 9, 2016

Topic: Industry Knowledge | Responsible Investing

The terms socially-responsible investing (SRI), mission-related investing, impact investing and environmental, social and governance (ESG) investing – all frequently grouped under the heading of responsible investing – have become a familiar part of the vocabulary of institutional and retail investors. Just what these terms mean in practice, however, and how their practitioners’ claims can be impartially assessed, has been less clear.

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Investment Management
Principle 5: Risk Management

Posted by Commonfund Institute on May 3, 2016

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

In this installation of Commonfund's 7-part series of Principles of Investment Management, we will review Principle #5: Risk Management. Risk can be defined broadly as anything that can result in the objectives of the portfolio not being met. The process of risk management seeks to enable fiduciaries to make the best possible investment decisions in the face of uncertainty and to maximize the likelihood that your portfolio objectives will be achieved.

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Investment Management
Principle 4: Manager Selection

Posted by Commonfund Institute on Apr 22, 2016

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

In this installation of Commonfund's 7-part series of Principles of Investment Management, we will review Principle #4: Manager Selection. In the past trustees did the investing themselves or assigned the task to one or two all-purpose managers. During the last three decades, that model has been superseded by one in which fiduciaries delegate management of the portfolio to a variety of specialized investment managers, seeking those with a demonstrated record of exceeding their benchmarks.

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What is Outsourced Investment Management?

Posted by Commonfund Institute on Apr 14, 2016

Topic: Governance and Policy | Industry Knowledge | Investment Strategy | Outsourced Investing

Outsourced investment management, once primarily a solution for small institutions with limited resources, is now used by a broad range of long-term investors. When properly implemented, outsourcing can help institutions with both large and small asset pools to address portfolio complexity and risk management challenges.

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Investment Management
Principle 3: Asset Allocation

Posted by Commonfund Institute on Apr 7, 2016

Topic: Asset Allocation | Governance and Policy | Industry Knowledge | Investment Strategy

In this installation of Commonfund's 7-part series of Principles of Investment Management, we will review Principle #3: Asset Allocation. Arguably one of the most important investment-related decisions, asset allocation will largely determine the level of risk-adjusted return you are seeking. A key responsibility of the governing board, your strategic asset allocation policy will set the course for investing the fund for many years to come. But determining an optimal asset allocation for your institution’s portfolio involves more than numbers.

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Investment Management
Principle 2: Payout Policy

Posted by Commonfund Institute on Mar 17, 2016

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

In this installation of Commonfund's 7-part series of Principles of Investment Management, we will review Principle #2: Payout Policy. Determining how much of the fund can be transferred each year to the operating budget or to designated beneficiaries while still maintaining the fund's ability to support its mission in the future.

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Investment Management
Principle 1: Objectives

Posted by Commonfund Institute on Mar 11, 2016

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

The responsibilities of those charged with oversight of a long-term investment fund such as an educational, religious or charitable endowment, foundation, hospital asset pool or pension fund differ fundamentally from those of other investment fiduciaries. The differences arise primarily from the nature of these funds’ beneficiaries. In this 7-part series, we’re going to discuss key issues and essential principles of investment management. We’ll start with Principle #1: Objectives.

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Viewpoint:
Seven Years On

Posted by Commonfund Institute on Mar 11, 2016

Topic: Industry Knowledge

How long is the long term? A year ago, endowments appeared to many observers to have recovered from the losses suffered in the 2008-09 global financial crisis. Double-digit investment returns had been reported in every year except FY2012, donations had returned to their pre-crisis levels and the investment strategies of successful endowments were once again followed closely in the financial press.

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Sample IPS Rider for Responsible Investing

Posted by Commonfund Institute on Feb 19, 2016

Topic: Industry Knowledge | Responsible Investing

A number of clients and prospects have asked how their Investment Policy Statement (IPS) can be amended to accommodate responsible investing strategies. In response, we have prepared a rider which can be inserted into the IPS of institutions that are seeking to engage in Socially Responsible Investing (SRI), Environmental, Social and Governance (ESG) investing, Impact investing or total or partial divestment of fossil fuel-related investments.

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Obama Clean Power Plan Stayed by Supreme Court

Posted by Commonfund Institute on Feb 12, 2016

Topic: Industry Knowledge | Responsible Investing

As anticipated in our white paper, Fiduciary Duty & Environmental Responsibility: Crafting a Low Carbon Response, states and industry groups opposed to President Obama’s action to impose stringent EPA regulations on coal-fired power plants have acted quickly to file lawsuits seeking to block the measure.

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2015 NACUBO-Commonfund Study of Endowments Results Released

Posted by Commonfund Institute on Jan 27, 2016

Topic: Industry Knowledge

Data gathered from 812 U.S. colleges and universities for the 2015 NACUBO-Commonfund Study of Endowments® (NCSE) show that participating institutions’ endowments returned an average of 2.4 percent (net of fees) for the 2015 fiscal year (July 1, 2014 – June 30, 2015) compared with 15.5 percent for the 2014 fiscal year. This year’s return was the lowest since the -0.3 percent reported for FY2012 and contributed to a decline in long-term 10-year average annual returns, to 6.3 percent from last year’s 7.1 percent. This year’s long-term return figure is well below the median 7.5 percent that most endowments report they need to earn in order to maintain their purchasing power after spending, inflation and investment management costs.

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New Environmental Regulations and the Impact on Fiduciaries

Posted by Commonfund Institute on Jan 20, 2016

Topic: Governance and Policy | Responsible Investing

Developments in world financial markets seem to occur more quickly every year, requiring ever-higher levels of expertise and experience on the part of investment committees. Climate change is a more slowly-evolving issue that will require a more strategic approach from trustees and investments committees. The Paris Agreement and the Clean Power Plan clearly raise important investment considerations for institutional investors. In addition, beyond portfolio considerations, practical issues suggest themselves.

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Fiduciary Duty & Environmental Responsibility: Crafting A Low Carbon Response

Posted by Commonfund Institute on Jan 20, 2016

Topic: Responsible Investing

Developments in world financial markets seem to occur more quickly every year, requiring ever-higher levels of expertise on the part of investment committees. Climate change is a more slowly-evolving issue that will require a more strategic approach from trustees and investment committees.

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How to Calculate Investment Management Costs

Posted by Commonfund Institute on Dec 17, 2015

Topic: Governance and Policy

How do you calculate what you pay for investment management? Few aspects of financial management are more important for fiduciaries than understanding the costs paid for the management of the funds for which they have responsibility. Read our short blog on how to calculate what you actually pay for investment management.

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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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5 Things to Consider When Choosing an OCIO

Posted by Commonfund Institute, John Griswold on Oct 1, 2015

Topic: Industry Knowledge | Outsourced Investing

There are typically two “essential P’s” to consider when assessing potential OCIO providers — People and Processes. But once that due diligence is completed, and the evaluation process enters the final stretch (that is, the waning pages of an RFP), it comes down to two more Ps that are just as critical: Performance and Price

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Participate in the next Healthcare Study

Posted by Commonfund Institute on Aug 28, 2015

Topic: Governance and Policy | Industry Knowledge

Become a participant in the next Healthcare Organizations Report. The Commonfund Benchmarks Study® – Healthcare Organizations Report provides an analysis of the investment and governance policies and practices of nonprofit healthcare organizations across the U.S. Let your voice be heard on a range a topics important to healthcare organizations.

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Be Heard: Participate in the next Study of Private and Community Foundations

Posted by Commonfund Institute on Aug 21, 2015

Topic: Governance and Policy | Industry Knowledge

Become a participant in the next Council on Foundations-Commonfund Study of Investment of Endowments for Private and Community Foundations (CCSF). This annual report provides an overview on investment and governance policies and practices of endowments for private and community foundations.

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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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Principles of Investment Management for Long-Term Investors

Posted by Commonfund Institute on Mar 11, 2015

Topic: Governance and Policy | Industry Knowledge

Are you a fiduciary who oversees a long-term investment fund such as an educational, religious or charitable endowment, foundation, hospital asset pool or pension fund? If so, then your role differs fundamentally from those of other investment fiduciaries. With that in mind, we have published the Principles of Investment Management for Long-Term Funds. Download this brochure today to review the key issues and essential principles that you should consider in your decision making process. In it, we discuss…

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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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Of Apples, Oranges and Onions: Assessing OCIO Performance and Fees

Posted by Commonfund Institute, John Griswold on Aug 17, 2014

Topic: Industry Knowledge | Outsourced Investing

Nearly all CFOs and investment committees consider it. And more than ever are acting upon it: investigating the possibility of an Outsourced CIO (OCIO) to manage their institution’s investments. When assessing potential OCIO providers, institutions typically first cover two “essential Ps”—the providers’ People and Processes.

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

Topic: Governance and Policy

How well a board functions determines the fortunes of the organization it governs. Mediocre performance may enable an organization to survive, while weak or dysfunctional boards may jeopardize their organization. Achieving excellence in board governance requires success in four crucial areas...

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About Forum

Posted by Commonfund Institute on May 16, 2014

Topic: Industry Knowledge

For more than 18 years, Commonfund Forum has grown into the must-attend annual conference for institutional investors. Financial markets may gyrate up and down. But Commonfund Forum remains consistent, steady, and always committed to a program of unsurpassed quality. Year after year, Commonfund Forum continues to provide institutional investors with timely information thoughtful analysis and unique perspectives – all from recognized experts in the worlds of investment management, economics, business and finance, government, academia, and the media.

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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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Viewpoint: A Different Kind of Climate Change

Posted by Commonfund Institute on Nov 12, 2013

Topic: Industry Knowledge | Investment Strategy

While operating charities entered the financial crisis with asset allocations that reflected their priorities and preferences at the time — and that were, in many respects, remarkably similar across the three categories of institution — the ensuing seven-year period has seen continual evolution and differentiation, with the result that these organizations, while they have moved in the same general direction of increased diversification, have done so in ways that reflect their own institutional preferences and priorities.

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10 Point Checklist to Get Governance Right

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

Topic: Industry Knowledge | Investment Strategy | 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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Long-Term Care – Healthcare’s New Regulatory Regime

Posted by Commonfund Institute on Apr 12, 2013

Topic: Asset Allocation | Industry Knowledge

Facing cost pressures and a new regulatory regime, healthcare organizations — especially those in the small and mid-sized range — should consider adopting the principles of the endowment model. Nonprofit healthcare organizations are confronting an unprecedented series of challenges as they strive to maintain positive operating margins in the face of declining reimbursements from insurance companies and government payers. The crisis is particularly acute at smaller and mid-sized organizations. Having played a major role in their communities for decades, they are finding that the healthcare business model is changing.

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Endowment Spending: A Look Back

Posted by Commonfund Institute on Sep 1, 2012

Topic: Governance and Policy | Industry Knowledge | Investment Strategy

Market volatility has severely tested many nonprofit institutions, causing them to revisit their endowment spending practices. In this paper, Fred Rogers, Vice President and Treasurer of Carleton College, analyzes the NACUBO-Commonfund Study of Endowments® findings and provides a brief primer on endowment spending, budgeting and accounting practices at institutions of higher education.

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Essential Not Optional

Posted by Commonfund Institute on Aug 25, 2012

Topic: Industry Knowledge

In an era when many believe that returns from financial markets will be lower than in the recent past, endowed nonprofits no longer have the option of treating fund-raising as a tactical resource. Fundraising for endowments has become an essential strategic capability that endowed institutions will have to build or acquire in order to thrive – or, perhaps, to survive. For this paper, we have reviewed the existing literature and sources of information on giving, and have been able to consult with leading academic researchers and fundraisers for leading nonprofit institutions. Their contributions form the basis for the conclusions expressed here.

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