Priorities for Organizations Reviewing Their Investment Plan

A 60-second read by Anthony Benante, CFA: Although the mission statement of organizations (such as endowments, foundations or not-for-profits) who manage funds for others (beneficiaries), can vary greatly, the need to responsibly manage the investments of the organization is crucial for the ultimate beneficiaries. Below are important priorities members should remember when reviewing their annual investments for their organizations:

Governance Structure:

Three areas of focus include responsibility, authority and accountability.  Clearly defining these will help guide the decision-makers to carry out the duties of the organization.  (Refer to the book A Primer for Investment Trustees for greater detail).

Prudent Person Standard:

Investment management function should be subject to a “prudent person standard”: The duty of care should require a board to act with the care, skill and caution that a prudent person reasonably would employ in managing their own affairs.  

Investment Policy Statement:

The investment policy should establish clear investment objectives. The approach for achieving those objectives should consider the need for proper diversification and risk management, the maturity of the obligations and the liquidity needs of the organization, and any specific legal limitations on portfolio allocation.

Fiduciary Duty:

Board members have a fiduciary duty, which is a legal and ethical responsibility to oversee management of property or power for another.  This requires members to act in the best interests of the ultimate beneficiaries of the resources, at all times. 

Please feel free to reach out to Baron Financial Group to review your current investment policy statement for suitability, and to make sure it is in line with your current investment allocation.  We are happy to provide a complimentary “Second Opinion” consultation.