As members of faith organizations, you may oversee an endowment or foundation along with other assets (retirement, operating etc.) How do other organizations manage these important funds? US investment consultant CapTrust is out with their annual survey of Endowment and Foundation Investors with insights on what your non-profit peers are doing. The survey is dense, covering topics from setting return expectations to board recruitment and governance. We found three interesting trends.
First: increased use of outsourced chief investment officer (OCIO) services. As outlined in our recent paper Faith-consistent Investing and Smaller Organisations, for smaller faith-based asset owners, OCIO should be a consideration, and apparently more are considering:
Second: decreased use of ESG mandates, (a two-year trend), but increased use of impact investing. The survey showed a sizeable decline in fixed-income ESG mandates (no reason given), but a significant jump in impact investing (defined here as “alternatives”). Among “non-adopters” of ESG / Impact, the two most sighted reasons are “potential performance impact” and “inability to track specific impact”, where the authors note the past top reason was "lack of knowledge of ESG investing."
Finally, we know from our research that negative screens are the most popular means of values expressions, while “positive screens” (or positive identification) are the least. CapTrust provides numbers to support this, with 70% of respondents using negative, 30% using positive. However, the survey finds that as an alternative to typically more expensive custom or separate accounts “the number of available off-the-shelf options [for negative and positive screening] continues to grow, providing nonprofits with more nuanced, readily available options from which to choose.” This is good news particularly for smaller faith-based asset owners.
Take the survey in context – US focus, ~170 organizations (with sometimes much smaller responding groups, depending on the question), and not a faith-focus, but non-profits broadly. Nonetheless an interesting peer group view of investing.