Principles of Nonprofit Investment Management - Commonfund

The financial world has changeddramatically since the first edition ofthis brochure was published in 2001.Well-publicized stories of corporatescandals, dubious trading schemes,public dissensions and individual fraudhave spilled out of the media into ouroffices and homes. Rigorous newlegislative and administrative rules havebeen established. It would be a greatmistake to think that these changesaffect only the corporate sector.Increased public scrutiny has placedeven more intense pressure on allboards to rigorously discipline theirfinancial operations and fiscal integrity.The breadth of these changes as theyaffect the nonprofit world has beencovered in Commonfund Institute’sMonograph, “Governance. YourBoard: Dynamic or Dysfunctional?”(See References, page 30.)Those responsible for the managementof a nonprofit investment fund bear aspecial burden, which is both ethicaland legal, for they are charged withthe preservation of capital and theresponsibility to fund the institution’smission. And there is no universalmeasure of what these responsibilitiesare and how long they will endure;appropriate time horizons can rangefrom one year to perpetuity.The roles and responsibilities of theinvestment committee members andstaff of a nonprofit are varied andcomplex. For that reason, we atCommonfund Institute have createdthis publication. In the followingpages we endeavor to summarize acomprehensive approach to nonprofitinvestment management that allconcerned can share: both the financialprofessionals and those with less expertise;both the trustees, who establishpolicy, and the officers who execute it.This publication identifies anddefines the seven key issues governingnonprofit investment management.These are the issues that you mustfocus on as you assume your responsibilitiesin managing your institution’sinvestment assets. These time-testedprinciples outline a clear and rationalway for you to make sound investmentdecisions while providing your boardwith best practices on setting objectivesand policies for your investmentactivities.- 1 -