Endowment Management
for Not-for-Profits

Carol cares deeply about land preservation. That is why she volunteered to serve as a trustee for a regional Land Preservation Trust in her county. Given her financial background, she also happily accepted the role as board treasurer and chairperson of the finance committee. She knew these roles were ideal conduits for adding considerable value to the organization.

When she first examined the endowment’s portfolio statements, she was quite dismayed. She discovered that the outgoing treasurer had simply inserted his “investment guy” as the manager of the multi-million-dollar endowment and that the portfolio contained a collection of broker-sold funds, separately managed accounts, small pieces of individual bond issues, and a handful of single stock positions. She could tell the investments were not the result of a thoughtful or well-executed strategic investment plan, but seemed to represent a collection of investment ideas that had been “sold” to the investment committee over time.

She further discovered that the investment policy statement had not been revised in nine years, nor were its guidelines being followed by the current investment advisor. There existed no written investment plan signed by the board and their advisor to ensure that their assets were managed in accordance with fiduciary principles.

We met with the board and interviewed them regarding the purpose of the endowment, what it was built to accomplish, and to understand their vision for the funds and their organization. In that context, we designed a robust investment policy statement and endowment spending policy for the board which governed the guidelines under which the endowment would be managed.

We replaced the collection of legacy investments with a prudent, balanced, low-cost, and globally diverse portfolio using institutional-style investment tools. We paired that portfolio with a revised board policy for handling incoming and outgoing cash flows to ensure the endowment could support foreseeable future demands. We then consolidated their multiple accounts and improved the reporting process to allow the finance committee to focus on mission-related concepts instead of having to spend hours second-guessing their former broker’s investment “ideas.”

This example is hypothetical and for illustrative purposes only. It is intended to reflect a typical client relationship and does not describe the experience of any actual client or represent an endorsement or testimonial of our firm.

Your endowment represents more than numbers. It’s the foundation for fulfilling your organization’s purpose. Yet many nonprofit boards discover their assets aren’t positioned to support that mission over the long term. As a board member or treasurer, you may be facing:

• Concerns about whether your investment approach follows fiduciary best practices

• Outdated or nonexistent governance structures

• Uncertainty about portfolio costs, diversification, and risk management

• Board meetings focused on investment decisions instead of your mission

At Rockwood Wealth Management, we work with nonprofit organizations locally in the New Hope, PA area and across the country. Our goal is to establish disciplined investment governance and prudent portfolio management so your board can focus on advancing your organization’s purpose.