The 2026 Investment Stewardship Academy, hosted by Commonfund Institute from June 7–10 on Yale University’s campus in New Haven, Connecticut, brought together institutional investors, foundation leaders, and investment professionals at a moment of unusual complexity. The program, designed to support the continuing education of nonprofit fiduciaries, guided attendees through an immersive curriculum focused on governance, investment strategy and mission alignment, as the sector navigates geopolitical disruption, shifting return expectations, and growing demand to align capital with mission. Here are the key themes and takeaways from this year's program.
The Landscape: What’s Keeping Endowment Stewards Up at Night
The mood heading into this year's Academy was one of measured caution. In an investor sentiment survey administered to attendees prior to their arrival, roughly half of attendees indicated that they anticipate returns this year to be below their 10-year averages, while geopolitical instability ranked as their top concern. This perspective closely echoed findings from the same survey administered to attendees at Commonfund Forum in February 2026, the firm’s annual investor conference—which similarly found that nearly half of institutional investors expect market returns to fall short of long-term averages, with geopolitical risk cited as the primary challenge facing markets.
Inflation anxieties nearly doubled between Commonfund Forum in late February and the Academy in early June — a shift almost certainly shaped by escalating tensions in the Middle East, the closure of the Strait of Hormuz, and the resulting impact on the Fed’s likelihood to cut rates this year.
These forces, alongside the turbulent public policy and regulatory environment, combine to create a dilemma for long-term institutional investors: return targets may need to rise to keep pace with inflation, while return expectations have flattened. In other words, the gap between what portfolios must earn and what markets are likely to deliver is widening. With this backdrop, effectively managing risks related not only to investments, but operations and mission, was top of mind and a focus of many sessions throughout the three-day event.
Intergenerational Equity: Balancing Today's Demands Against Tomorrow's Needs
A foundational principle for endowments and foundations is intergenerational equity: future beneficiaries should have access to resources on the same or similar terms as current ones. While simple, in theory, this is difficult to achieve – not least due to the breadth of current concerns and uncertainty about the future direction of the market and economy.
The central challenge goes beyond short-term volatility, to a gradual erosion of real endowment value when spending and inflation are factored in. Consistently meeting a benchmark of CPI plus 5% (roughly 7.5% in the current environment) over the long-term requires discipline in every dimension of portfolio construction. Data from the NACUBO-Commonfund Study of Endowments (NCSE) is exemplary: only respondents at or above the 61st percentile have managed to clear that bar. 1
Relatedly, a well-designed spending policy is one of the most powerful tools an institution has to prevent market risk from becoming mission risk. When spending is rigid and markets are declining, organizations are forced to make unexpected programmatic cuts. The policy should be designed to absorb market volatility to protect the operating budget from short-term fluctuations.
With this in mind, the framing shifts from reacting to short-term market changes to maintaining long-term structural discipline. Volatility can be managed, but systematic setbacks in purchasing power are more challenging to overcome.
Governance: The Foundation Everything Else Rests On
Good governance was a persistent theme across the program — not as an abstract ideal, but as a practical source of competitive advantage. Research reinforces this point: strong governance is itself a form of alpha (or an investment’s excess return relative to a benchmark) in part because effective governance is key to mitigating and managing risks. The most resilient institutions distinguish themselves through structured, proactive risk management.
Suggestions on risk management shared across sessions included:
- Incorporate the question into agendas each year: What must never change, what should we consider changing, and what are we willing to let go of?
- Boards and committee should have practical tools and frameworks, like a crisis playbook, to help identify and classify disruptions, guide key decisions — on spending, rebalancing, liquidity, and fundraising — and identify where the crisis may create an opportunity as well as a risk. Importantly, this is a framework, not a procedure manual.
- Establish a responsibility matrix in advance that defines who is accountable, informed, and responsible, before any potential risk is realized.
- Rehearse decisions in advance so that execution under pressure is faster and more effective.
- Scenario plan to explore the above considerations — but also to build trust and alignment between staff and board members.
Finally, continuing education is essential and should be baked into governance culture — not as a requirement, but as a clear expectation. Board members cannot govern what they do not understand and given the pace of change in areas like AI, digital infrastructure, and cybersecurity, continuing education may be more critical than ever. Where expertise gaps exist, leaning on an OCIO or trusted advisor to fill them is a sign of good governance, not weakness.
Asset Allocation and Diversification: Where Outcomes Are Made
Long-term investment outcomes are largely attributable to asset allocation decisions. Data highlighted throughout the program suggests that access to illiquid strategies, and top managers within those strategies, is one of the most important factors distinguishing top- and bottom-quartile performers among peer institutions.
A few key data points shaped this discussion:
- Private equity has outperformed public equities in roughly 90% of periods since 1990, and it helps reduce concentration risk in public markets where the Magnificent 7 2 (Mag 7) now dominate returns in ways that distort index-level valuation.
- The equity risk premium for those same mega-cap tech stocks has fallen below historical norms, suggesting stocks may be overvalued at current multiples. If one strips out the Mag 7, the broader S&P 500 looks closer to long-term fair value.3
- The liquidity premium — the excess return investors earn for holding private versus public equities — has rebounded above its historical average of 3.5%, now around 5.7%, after spending most of 2021–2024 below it, indicating a more attractive environment for committing to illiquid strategies.4
The practical implication: Institutions need to assess their true illiquidity budget, account for mission-alignment constraints, and reflect both clearly in their Investment Policy Statement. Further, unforced errors — trying to time the market, skipping vintage years in private equity, or overcommitting when prices are elevated — can introduce mission risks related to missing long-term return targets.
Dreaming Bigger: Capital as a Force for Good
Another dimension of this year's Academy asked a more expansive question: given the scale of capital that institutional investors deploy, what problems could it help solve — and how should we think about that alongside financial return? Keynote speaker, Dan Pallotta, challenged attendees to rethink how nonprofit institutions fundraise, scale, and have direct impact in a more expansive way.
The theme was tied back to endowment management in a session on mission-aligned investing. Debunking misconceptions, speakers shared that a majority of impact investors target market-rate returns. The prudent investor standard has always evolved as our understanding of risk, return, and externalities has deepened — mission alignment is the next iteration, because it asks investors to account for costs that have historically been externalized onto communities, environments, and future generations. Ultimately, assessing an investment’s impact was discussed not as a departure from fiduciary duty, but as its evolution.
Panelists also agreed that any discussion about mission-aligned investing should begin with what you are trying to accomplish (e.g. workforce housing for local teachers, health outcomes for underserved populations, career pathways for students). This can be more effective than reaching for terminology that resonates differently across boards. The mission comes first; the label is secondary.
The path forward is less about adopting a unified definition of impact investing and more about having conviction in a specific strategy, putting it on the agenda, and building the coalition to sustain it over time. As one speaker noted: none of the structures we operate within are laws of nature; they are the result of decisions made over time, and new decisions are always available to us.
These takeaways reflect themes from the Investment Stewardship Academy hosted by Commonfund Institute, June 7–10, 2026.
1. Commonfund analysis of FY25 NACUBO-Commonfund Study of Endowments data, referring to reported 20-year returns.
2. Includes Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla.
3. Bloomberg, Commonfund analysis.
4. The liquidity premium is a proprietary Commonfund measure of the added return required by investors to hold illiquid investments as compared to more liquid, publicly-traded investments.)
