Should We Issue an Investment Manager RFP? 7 Key Considerations

September 21, 2020 |
1 minute read
|

Best practice for nonprofits is to issue a Request for Proposal (“RFP”) for an investment management partner every market cycle. Typically, that is at least every 7 to 10 years, or as it is explicitly defined in your Investment Policy Statement. Even if you hear angels sing every time you speak with your investment manager, it is important to maintain the discipline of issuing an RFP for a variety of reasons, including the following:

  1. The Laws Change

    The Uniform Prudent Management of Institutional Funds Act (“UPMIFA”) continues to expand and evolve. It is the guiding principle for all investment policy statements and boards. Currently, 49 states have adopted some version of UPMIFA (Pennsylvania and Puerto Rico are the exceptions).

  2. You Have More Options

    A few years ago, there were only two basic investment management options: an outsourced chief investment officer (“OCIO”) which maintains full discretion approach, or a traditional non-discretionary consultant. Today, these roles have blurred, and non-profits can choose exactly how involved they want to be in oversight of their portfolio across a full spectrum of choices.

  3. The Market Evolves

    Tempered capital market expectations are contributing to more interest in private investment strategies and to the potential for earning the illiquidity premium. At the same time, concerns over high fees have reduced interest in hedge funds and increased the use of passive strategies. Are you getting the best thinking on these trends from your advisor?

  4. Your Priorities Change

    Socially responsible, diversity, divestment from carbon, and impact investing for example, have all taken center stage over the last decade. Some, or all of these may also be relevant to your own nonprofit and finding alignment through your investment portfolio could be additive.

  5. Fees Have Compressed

    You might be overpaying! Every dollar you save on manager fees and investment services can go to directly support your mission.

  6. Best Ideas

    Take the opportunity to take a step back to gather second opinions for your nonprofit. Even if you decide to maintain your current advisor relationship, you may benefit from a fresh perspective or insight gained through the process to make your nonprofit and your investment partnership stronger!

  7. A Fiduciary Responsibility

    Finally, prudent stewardship can be demonstrated by adhering to the discipline of routinely evaluating the options available in the marketplace for your nonprofit.

Issuing an RFP can be a daunting and time-consuming process, but in the end, it is an important discipline. This is the first blog in a two-part series on the RFP process. Next up, 10 Tips for Better RFPs.

Submit Your RFP

 

Paige Rabalais

Author

Paige Rabalais

Managing Director

Disclaimer

Certain information contained herein has been obtained from or is based on third-party sources and, although believed to be reliable, has not been independently verified. Such information is as of the date indicated, if indicated, may not be complete, is subject to change and has not necessarily been updated. No representation or warranty, express or implied, is or will be given by The Common Fund for Nonprofit Organizations, any of its affiliates or any of its or their affiliates, trustees, directors, officers, employees or advisers (collectively referred to herein as “Commonfund”) or any other person as to the accuracy or completeness of the information in any third-party materials. Accordingly, Commonfund shall not be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in, or omission from, such third-party materials, and any such liability is expressly disclaimed.

All rights to the trademarks, copyrights, logos and other intellectual property listed herein belong to their respective owners and the use of such logos hereof does not imply an affiliation with, or endorsement by, the owners of such trademarks, copyrights, logos and other intellectual property.

To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated herein. Forecasts of experts inevitably differ. Views attributed to third-parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Market and investment views of third-parties presented herein do not necessarily reflect the views of Commonfund, any manager retained by Commonfund to manage any investments for Commonfund (each, a “Manager”) or any fund managed by any Commonfund entity (each, a “Fund”). Accordingly, the views presented herein may not be relied upon as an indication of trading intent on behalf of Commonfund, any Manager or any Fund.

Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Fund. Such statements are also not intended as recommendations by any Commonfund entity or any Commonfund employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information or statements. Past performance is not indicative of future results. For more information please refer to Important Disclosures.

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Disclaimer

Certain information contained herein has been obtained from or is based on third-party sources and, although believed to be reliable, has not been independently verified. Such information is as of the date indicated, if indicated, may not be complete, is subject to change and has not necessarily been updated. No representation or warranty, express or implied, is or will be given by The Common Fund for Nonprofit Organizations, any of its affiliates or any of its or their affiliates, trustees, directors, officers, employees or advisers (collectively referred to herein as “Commonfund”) or any other person as to the accuracy or completeness of the information in any third-party materials. Accordingly, Commonfund shall not be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in, or omission from, such third-party materials, and any such liability is expressly disclaimed.

All rights to the trademarks, copyrights, logos and other intellectual property listed herein belong to their respective owners and the use of such logos hereof does not imply an affiliation with, or endorsement by, the owners of such trademarks, copyrights, logos and other intellectual property.

To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated herein. Forecasts of experts inevitably differ. Views attributed to third-parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Market and investment views of third-parties presented herein do not necessarily reflect the views of Commonfund, any manager retained by Commonfund to manage any investments for Commonfund (each, a “Manager”) or any fund managed by any Commonfund entity (each, a “Fund”). Accordingly, the views presented herein may not be relied upon as an indication of trading intent on behalf of Commonfund, any Manager or any Fund.

Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Fund. Such statements are also not intended as recommendations by any Commonfund entity or any Commonfund employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information or statements. Past performance is not indicative of future results. For more information please refer to Important Disclosures.