At Commonfund Institute, we’ve long adhered to the six guiding principles of nonprofit investment stewardship, often referred to as the "6 Ps": Purpose, Policy, Process, Portfolio, People, and Perspective. These principles form the foundation of how we approach fiduciary duty, providing institutions with a framework for sustainable, mission-driven investment stewardship.
However, in a rapidly evolving landscape, we believe that a vital element may be missing from this structure: Progression. As defined by the Cambridge English Dictionary, progression is “the act of changing to the next stage of development.” This concept is critical for institutional investors. It’s not just about responding to challenges but anticipating them, adapting to shifts, and positioning for long-term success to meet institutional needs and achieve intergenerational equity – the probability that the portfolio's purchasing power is preserved for future generations of constituents after accounting for the institution’s spending rate and inflation.
Progression as a seventh principle encourages institutions to evolve proactively. It forces institutions to look beyond the present moment and ensure they are prepared to meet future challenges head-on, whether those involve shifts in mission, governance, or external conditions that are more difficult to anticipate and control, such as enrollment challenges, community crises or global pandemics, similar to what we all experienced with COVID-19.
Here’s how Progression elevates each of the original 6 Principles:
- Purpose
Organizational missions are dynamic and uniquely understood and expressed by each institution. There may come a time when the endowment's original purpose might no longer fully meet the institution’s evolving needs. Progression encourages boards and committees to reassess whether the endowment's purpose is still aligned with current and future demands. Does the institution’s mission require new funding strategies? Has the community it serves evolved? Forward-thinking organizations consider these and other questions regularly to remain relevant, mission-aligned, and purpose driven.
- Policy
Broadly, governing documents should be considered living documents that strive to reflect the present and future vision of an institution. This is inclusive of investment policies, which should be reviewed, and, as appropriate, refreshed and reconsidered. For example, as the institution’s goals evolve, so should its investment policy statement (IPS). While it is crucial not to react impulsively to market fluctuations, the IPS must reflect long-term shifts in institutional strategy. Regular reviews, at least annually or bi-annually, ensure that the policy adapts in step with institutional progress.
- Process
Progression often brings changes to processes, such as staff reorganization or leadership transitions. As institutions grow, they may also consider outsourcing the investment function to a consultant or OCIO (Outsourced Chief Investment Officer). This shift requires careful governance and management considerations. Institutions must anticipate how outsourcing impacts their structure and decision-making, with trusted resources like Commonfund Institute’s OCIO toolkit guiding these transitions.
- Portfolio
Portfolio management is never static, and progression encourages ongoing evaluation of strategic policies, asset allocation, and diversification strategies. New leadership or changes in governance may introduce fresh ideas for enhancing portfolio performance. Whether through innovation in asset allocation or the exploration of previously untapped investment opportunities and strategies, such as impact or mission-aligned investing, an institution that is committed to progression continually reassesses how its portfolio can better serve long-term goals and align with mission.
- People
Diversity of thought and experience is a cornerstone of progression. Embracing new voices on the board, within committees, in investment manager & consultant partnerships or across staff positions and other key stakeholders can invigorate institutional decision-making. New members often bring unique perspectives that challenge the status quo, fostering innovative thinking, which can help the institution stay centered on purpose. Progression here means embracing change and seeking out diversity in leadership and key relationships to strengthen the organization’s overall effectiveness.
- Perspective
Strategic thinking and long-term positioning are critical components of institutional success. Progression demands that organizations remain flexible and open to new ideas, particularly when reviewing their IPS and the effectiveness of their board, committees and staff. Institutions that regularly evaluate their perspectives—incorporating new trends, global shifts, and diverse points of view—are better positioned to navigate change and seize opportunities.
In an era of constant change, the case for a seventh P: Progression, is compelling. Institutions that are willing to evolve, adapt, and progress are more likely to thrive. By considering integrating progression into the foundational principles of nonprofit investment stewardship, organizations can better anticipate challenges, embrace innovation, and ensure sustainable growth for generations to come.
