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Investment Stewardship Academy: Takeaways for Navigating an Evolving Landscape

June 24, 2025 |
4 minute read
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Navigating Nonprofit Investing: Key Takeaways from ISA 2025
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For over 30 years, Commonfund Institute has hosted the Investment Stewardship Academy (ISA) to bring institutional investors together to learn, collaborate, and better support the missions they serve. Given the growing complexity of nonprofit investing and governance, the timing of our 2025 program was well planned.

Leaders across finance, philanthropy, and governance joined us for ISA 2025 from June 8-11th at Yale University to share insights into best practices and forward-looking strategies. Below are key themes and takeaways:

Investment Philosophy Amid Evolving Market and Institutional Conditions

Equity & Liquidity Premiums: While Commonfund’s analysis of long-term data supports an equity risk premium of roughly 3.9%, today's narrow market and high valuations—especially among the “Magnificent 7”—suggest caution. Private markets may still offer an estimated 3.4% liquidity premium, with benchmarking data demonstrating that institutions allocating greater than 20% to private markets generally outperform peers.1 Understanding opportunities and tradeoffs across strategies, especially given the institution’s evolving liquidity needs, is key.

Diversification: With global markets more correlated than ever, diversification must evolve beyond geography—focusing on asset classes, sectors, and risk factors. The core principle of diversification for long-term endowment management remains regardless of the economic or political environment.

Risk management: The inverted yield curve remains a watchpoint for recession risk, yet well over five hundred days in, no recession has materialized. Fed rate cut expectations remain fluid, with two cuts still anticipated in 2025. Meanwhile, uncertainty is at record highs, with indices from the St. Louis Fed and academic institutions tracking dramatic spikes in policy uncertainty in 2025—raising stakes for careful risk management. Institutions may want to consider development of a framework to address stress scenarios and crises that considers the severity, duration, and potential impacts on the investment portfolio. Additionally, institutions can identify opportunities for proactive governance when facing periods of uncertainty.

Center Governance Practices that Align with Mission

Fiduciary duty, comprising obligations of loyalty, obedience, and care, extends beyond a narrow focus on short-term financial returns to a broader lens that includes organizational mission, purpose, and stakeholder impact.

BoardSource’s Framework for Purpose-Driven Leadership: Traditional fiduciary oversight—focused on asset stewardship—is essential but only a baseline. Effective governance also requires engaging in strategic and generative modes. Strategic governance aligns resources with long-term mission and impact, prompting questions like: “Are we positioned to meet our goals?” or “Should our investment policy evolve?” Generative governance invites deeper inquiry, helping boards navigate complexity by identifying emerging shifts that could shape the institution’s future. Leaders should make space for all three modes (fiduciary, strategic, and generative) to ensure all decisions are purpose driven.

Spending as a Strategic Tool

Institutions must acknowledge the growing need for financial support for constituents while aligning spending with mission needs and long-term sustainability. One way to do this is by reviewing the institution’s spending policy. Endowment spending methodologies vary, but distributing a percentage of a moving average of the endowment value is a common methodology followed across nonprofit institutions.2 However, using the university hybrid method, which considers both endowment values and inflation to determine distributions, and longer-term averaging approaches can reduce drawdowns and decouple risk between the endowment and its institutional support.

Inflation can be a strategic input into spending, budgeting, and investment policy, and using various inflation measures – including the Higher Education Price Index (HEPI) in the spending calculation – can play a role in smoothing expenditures in support of your institution.

Philanthropy and Endowment Fundraising, Connecting the Dots

Philanthropy in 2025 is marked by global turbulence and domestic public policy uncertainty, coupled with dynamic generational shifts in wealth. It is estimated that there will be an $85 trillion dollar wealth transfer, from baby boomers to Millennials and Generation Z (“Gen Z”) occurring by 2045. With this wealth transfer comes new attitudes and trends, with Millennials and Gen Z more motivated by transparency, social impact and sustainable strategies. Making a compelling, mission-oriented case for support of the institution and endowment is more important now than ever, and transparency about how assets are distributed may increase trust and support.

In this landscape, philanthropy will continue to play a critical role in endowment fundraising, providing long-term financial stability and enabling organizations to pursue their missions with greater independence in the face of federal budget cuts. As traditional funding sources face volatility with no end in sight, endowments supported by strategic philanthropic investment in tandem with strong returns offer a pathway to institutional resiliency.

Mission-Aligned Investing: From Values to Practice

Mission aligned investment strategies have been gaining traction, but perceptions of performance tradeoffs persist. Leaders emphasized that all investing has impact—understanding the impact and acting with intention is key.

Strategies for aligning investments with an institution’s mission, values, and goals include thematic impact strategies, ESG screening, shareholder advocacy, and engaging diverse managers. Importantly, mission alignment goes beyond optics, embedding values into the investment thesis, due diligence and manager selection, and risk management.

OCIO Partnerships: A Strategic Lever

With increasing economic and regulatory complexity and often-constrained internal resources, a strategic partnership with an OCIO can be beneficial. In considering an OCIO as a partner, institutions are urged to consider a prospective provider’s sectoral expertise, ability to customize solutions to support an institution’s goals, and how the firm’s capability set matches an institution’s needs.

Best practices when collaborating with a provider include regular partner evaluations, clear determination of roles and responsibilities (understanding they may evolve over time), and aligning services with organizational mission, values, and long-term needs.

Conclusion and Resources

Nonprofit investors face rising complexity and accountability. Whether adapting governance, investment, and spending policies, or rethinking how investments support purpose, one message is clear: long-term success requires clarity of mission, refocusing on policy and planning, and strategic partnership. Commonfund Institute offers opportunities for continuous learning through thought leadership, benchmark studies, professional development programs and more. A short-list of related resources is listed below. You may also sign up to receive our Insights Blog to stay up-to-date.

Investment Stewardship Academy Join this three-day program designed for institutional investors who are responsible for stewarding long-term capital.  

 

 

 

1 NACUBO-Commonfund Study of Endowments data. 

2 According to Commonfund Benchmarks Studies.

 
Amanda Novello

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Amanda Novello

Senior Policy and Research Analyst

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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.

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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.