Nonprofits Considering Outsourced Model for Investment Management

August 17, 2010 (PLANSPONSOR.com) – An SEI Quick Poll shows nonprofits have considered switching to an outsourced CIO model to manage assets, as a result of recent economic conditions.

More than half (54%) of poll respondents that currently use an investment consultant are interested in learning more about the benefits of an outsourced approach, according to a press release. Of this group, 52% cited increased complexity in investment vehicles and 43% cited increased due-diligence requirements as reasons for concern.   

In addition, 20% of respondents said their organization lacks the necessary internal resources and 25% said the number of new asset classes is a strain on their existing investment management approach.  

Overall, the highest-ranking challenges identified by respondents were: investment vehicles have increased in complexity (53%), tougher to gauge global economic outlook (51%), increased due diligence requirements in monitoring managers (41%), and impact endowment has on overall finances continues to increase (40%).  

Looking ahead, respondents identified as top concerns: aligning investment decisions with overall organizational finances, maintaining liquidity in portfolio, cash management, and inflation hedging. Protecting the organization’s credit rating is a key issue among higher education institutions and hospitals as more than three-quarters (80%) of the respondents that identified this challenge were from those groups.  

The poll was completed by 177 nonprofit executives and investment committee members responsible for overseeing endowments and foundations ranging in size from $25 million to more than $1 billion.  

Rebecca Moore
editors@plansponsor.com