Foundations and Endowments Expecting More from Investment Consultants

January 6, 2010 ( - An SEI Quick Poll finds that nonprofit foundations and endowments are concerned about defining fiduciary responsibilities for trustees and investment consultants as they head into 2010.

An SEI news release said 84% of the poll respondents indicated that defining fiduciary responsibilities for trustees and investment consultants was a priority for 2010. Seven in ten respondents said their organizations currently use an investment consultant, and 40% of that group said they plan on evaluating the consultant or investment adviser relationship within the next two years.

Nearly one-quarter (24%) of respondents indicated their investment committee is concerned about having the resources required to perform the necessary due diligence around investment managers.

“This poll suggests investment committees want more direction and greater accountability from individuals giving them investment guidance,” said Carolyn McLaurin, vice president and managing director of SEI’s Nonprofit Group, in the news release. “Nonprofits are demanding portfolio construction advice that addresses their challenges, such as how to build portfolios with fewer restrictions when accessing funds. Accountable partners who can provide these services will be the model of choice moving forward.”

Liquidity and inflation also topped the list of concerns for foundations and endowments. Nearly all (98%) of the poll respondents said that maintaining liquidity across the portfolio was a priority, and 40% said the organization has increased the overall percentage of assets in cash reserves, compared to recent years.

In addition, 96% indicated inflation concerns are a priority, while nearly one-fifth (14%) identified this as an “extremely high” point of interest.

Most respondents (88%) said the organization has assets invested in alternatives, with 40% indicating the allocation was more than 20% of the overall portfolio. Nearly one-quarter (22%) of respondents said the organization plans to increase its current allocation of alternatives in the next six months. Among alternatives, the two most popular currently used are hedge fund-of-funds (72%) and private equity (69%).

The poll, conducted by SEI’s Nonprofit Management Research Panel, was completed in December 2009 by 103 financial executives and investment committee members from U.S.-based nonprofit organizations with total invested assets ranging from $25 million to more than $1 billion. None of the participants were institutional clients of SEI.

A complete summary of the poll can be requested by e-mailing