You have explored the essence of OCIO on this page and now understand why it's becoming the choice of many investors. Move on to consideration or jump right to transition to continue your journey.
The trend toward leveraging Outsourced Chief Investment Officers (OCIOs) for managing investments has been on the rise among a variety of nonprofit institutional investors, such as private and community foundations, as well as institutions of higher learning. However, the pivotal question remains: Is adopting an OCIO strategy the best path forward for your organization?
In this section, we delve into the essentials: defining an OCIO, exploring the reasons behind institutions choosing to collaborate with an OCIO, and offering both a detailed guide and an informative short video that break down the different models and the extent of authority granted.
Several reasons motivate nonprofit investors to partner with an OCIO, ranging from navigating the intricacies of markets and portfolios to securing access to in-demand managers. As the landscape of investment evolves, these investors are on the lookout for collaborative opportunities to expand their constrained resources.
In this video guide, Anita Hariton, Head of Client Engagement, discusses best practices in investment policy implementation, focusing on three options: internal management, consulting with a committee, or outsourcing to an OCIO.
Key to effective investment governance is optimizing committee time, ensuring decision-making is in the right hands, and defining clear accountability for results.
When seeking OCIO providers, it's crucial to define your needs, roles, and responsibilities, evaluate performance and fees, and secure access to quality managers.
Video was recorded December 2022
Partnering with an OCIO offers your organization flexibility, but a key consideration is how much control you’re willing to delegate. Engaging with an OCIO typically results in giving them discretion over portfolio construction and investment selection. However, it also allows you to tap into the expertise and resources of external investment professionals, potentially boosting investment performance and efficiency. This shift can free up internal resources for other strategic initiatives. The one constant in this arrangement is the fiduciary duty—ensuring that actions are taken in the best interests of the organization and its beneficiaries.
Hover over the three governance models to see the basic roles and responsibilities for each model.
Navigating OCIO duties effectively requires understanding roles, clear benchmarks, and communication. Organizations should define and share investment objectives and risk tolerance, guiding the OCIO's decisions. Continuous dialogue maintains alignment and adapts to strategy changes. OCIOs must conduct thorough investment research, select managers, and manage risks, regularly updating the organization on performance and strategy. Ultimately, a successful OCIO partnership is built on trust, transparency, and open communication.
You have explored the essence of OCIO on this page and now understand why it's becoming the choice of many investors. Move on to consideration or jump right to transition to continue your journey.
Understanding what an OCIO entails is one thing; discerning the essential steps and details necessary when evaluating various OCIO providers is another. Delve into our curated materials to discover the optimal OCIO collaborator for your organization.
After thorough investigation, you're poised to transition to an OCIO. What's the best approach to crafting your RFP to maximize the benefits of this partnership? Alternatively, if you're already working with an OCIO but they're falling short of your standards, what steps should you take?
Among one of the pioneers of outsourced CIO services for nonprofits, We have been educating investors on the OCIO model since its founding in 1971. We have learned that understanding the fundamentals, asking the right questions and building a partnership is critical to the success of an organization, and different than a traditional consulting relationship.
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