Emphasis on Sound Governance
We believe that sound governance, transparency, accountability, and effective decision-making are prerequisites of superior performance.
We have observed lamentably often the symptoms of poor investment governance—high manager turnover, performance-chasing, rigid decision-making rules, misplaced priorities, excessive costs, inconsistent decision-making, conflicts of interest, a beauty contest approach to picking managers, and a paint-by-numbers approach to asset class structure. Our client service model emphasizes the key role of governance in investment success.
These issues are explored in detail in Endowment Management for Higher Education and Endowment Management for Foundations and Nonprofits, co-authored by Nikki Kraus, CFA, Strategic’s Chief Client Officer, with significant contributions from many senior Strategic professionals, which discusses optimal governance for all nonprofit institutions.
Some of the topics covered in the book include:
- The importance of understanding enterprise risk when setting investment strategies
- How to preserve institutional memory, yet welcome new ideas on the committee
- How to optimize the limited in-person time of the committee
- Communication strategies to keep all key stakeholders informed and engaged
- Implementing committee requirements
- The importance of fundraising to building a sizeable endowment and the resulting increased engagement and scrutiny of donors
- Optimal committee size and background of members
- The importance of clearly defining roles and responsibilities of all parties involved in endowment management
- Key considerations when selecting any investment arrangements (OCIO, internal CIO, consultant, managers)
- Defining relevant objectives, peers, and benchmarks
In addition, we regularly work with industry groups, such as the National Association of College and University Business Officers (“NACUBO”), the Association of Governing Boards of Universities and Colleges (“AGB”), Council for Advancement and Support of Education (“CASE”), and the Council on Foundations ("The Council") on various initiatives, including serving as speakers and participants at conferences, and share with our clients insights we gain from our efforts. We view it as an important component of our role to be current on industry trends.