Top Ten Tips for Better RFPs

October 8, 2020 |
3 minute read
|

A tightly run RFP process can help ensure your organization will find an ideal investment partner to help you fulfill your organization’s mission. As the second installment of our blog series on the RFP process, we have put together a list of 10 tips for better RFPs.

 

  1. Know what you want

    The age old saying about measuring twice to cut once applies to RFPs too. Spoiler alert: If you do not have a sense of what you are looking for going into an RFP, asking 50 questions to dozens of managers will not clarify your options! The more work you can do upfront to build consensus on the type of engagement you want, the more effective the process will be. Knowing how much discretion the Investment Committee or Board would like to retain, what type of support is preferred and as many other key factors you can identify will streamline the selection process.

  2. Engage broadly

    Ask all your key individuals for input. If your institution partners closely with another, check in to see their needs are not overlooked. Search Committees typically include the Finance or Investment Committee, or a subset, along with your CIO or CFO. Consider adding other individuals who bring valuable expertise or a different perspective. From this group, then choose one person who is most familiar with your organization as the primary contact for inbound questions and to collect the responses.

  3. Resist revising governing documents prior to issuing an RFP

    It is easy to do a quick annual review of your Investment Policy Statement and sign off. However, organizations that are about to issue an RFP often take a closer look and all sorts of details, discrepancies, and questions tend to bubble up. Consider delaying an overhaul of your IPS until the RFP process is complete and you can benefit from the involvement of your investment manager or consultant.

  4. Consider issuing an RFI first

    A Request for Information (“RFI”) differs from an RFP. RFI’s are typically issued to a broader group than an RFP and ask fewer questions (~ 10-20) which are at a high level. The objective with an RFI is to solicit quantitative and qualitative information that can help you narrow the field for a subsequent RFP. Typical data that you might seek in an RFI may include a business profile, AUM, average/median client size, types of clients, services provided, experience, resources, fee ranges, track record, etc. Further, limit responses to no more than 10 pages.

  5. Avoid “boiling the ocean”

    A public or quasi-public plan may be required to publicly post all RFPs they release, resulting in dozens of lengthy responses. If you have the flexibility to limit the universe of respondents, do so. While an RFI may be issued to ten or more institutions, try limiting respondents to an RFP to five or so. Assuming you have a sense of what you are looking for and have taken the opportunity to speak with similar nonprofits and learned what they like and dislike about their managers, with a little research, you probably have a good sense of which firms you would like to respond. Invite them; no need to “boil the ocean”.

    Download Your Sample RFP Today
  6. Network with peers

    Reach out to connect with nonprofits of a similar size, structure or location to hear about the important lessons they learned, their recent RFP experiences, and what they like and dislike about their manager. You may also find them more than willing to share basic RFP questions with you to provide a starting point. You can also download a sample RFP here. There is always power in a network which shares information and a pending RFP is the perfect reason to reach out and connect.

  7. Be transparent

    Share your current investment policy statement and most recent investment performance statement, including current portfolio holdings, in the RFP. If you do not want to reveal the name of your current manager, black it out and re-scan the document. The more information new candidates have, the more relevant their responses will be.

  8. Pose questions most relevant to you

    Many standard diligence items are necessary in an RFP and will ‘check a box’. These include: attach your ADV, do you have a disaster relief plan, and has there been any criminal activity. For the remaining questions, the more you can custom tailor and directly relate the information requested to your nonprofit, the more meaningful the responses will be. Also avoid ambiguity in your questions, so you can make “apples to apples” comparisons among respondents. This is particularly important for performance and fees.

  9. Set a page limit for responses

    RFPs generally include about 50 questions and answering those questions normally takes about 25 pages, excluding the pages of legal disclaimers at the end, plus another 50 pages or so of employee biographies, ADVs and sample reports. That’s a lot of reading and analysis before you even look at the exhibits! Aside from saving your time and sanity, this will force managers responding to create a more relevant, focused response (and widen the margins). It’s a win-win.

  10. Create an evaluation scorecard

    Once you have agreed on your priorities, design a scorecard to share with those reviewing RFPs so each person reviewing the responses has a consistent way to evaluate them. For example, “Manager has expertise in partnering with institutional nonprofit plans” which the committee member ranks 1-10. If this is an important question to your group, weight the answer appropriately. This also takes some of the bias and emotion out of the process. The same scorecard can be used again to rate managers during their finals presentations.

As always, Commonfund remains standing by if we can be assistance of you.  Click here to read part one of the RFP blog series titled, “Should We Issue an Investment Manager RFP? 7 Key Considerations."

Want to dive deeper into the RFP Process?  Click here to read "Outsourcing: Writing 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.