Case Studies

03/09/2018

Nonprofit Educational Institution

We were introduced to a nonprofit education institution through a prior client now working for the organization. After receiving a request for proposal and reviewing their current policy statement and investments, it became clear that their incumbent advisor, a large brokerage institution, was delivering inadequate levels of service. Populated with high-cost funds, their portfolio was not providing enough value to justify the cost – well in excess of one percent per year in aggregate – and considering the mission of the organization to support students in the community with scholarship funds, sufficient special attention was not being paid to the details of their spending policy.

The Process

The Process

After our preliminary Garde Process discovery meeting with the development director and board chair, we gained a better understanding of what was working, some specific unmet needs, the board communication dynamic, and other opportunities to improve service and overall value. We also spent time looking at the existing investment policy statement (IPS) to answer three questions: does it clearly illustrate roles and responsibilities, does it give specific direction about risk and guidance to the investment advisor for managing the assets, and is it written in a way that any board member can understand? A proposal was created and submitted, and a presentation made to the investment committee. Once selected as their advisor, we scheduled a meeting with the investment committee to discuss the recommendations generated through the process.

The Outcome

The Outcome

As an effective, community-minded organization, it was important for them to maintain a high level of mission clarity within their IPS. Through several investment committee meetings, our strategy was put into action, including outlining a clear methodology for distributing scholarships and the constraints for protecting the long-term viability of the endowments. We also created specific asset allocation guidelines that we, as the advisor, could follow knowing risk was being managed in accordance with the needs of the board. After the updated IPS was approved, a globally balanced portfolio of exchange-traded funds was implemented, thus reducing the overall cost of investment management while providing an even greater level of diversification and risk management.

With a sound IPS as the guideline for future meetings, we can address any issue with confidence, properly evaluate performance and provide assurance to the board of the responsible management and distribution of their assets.