One of the most important roles of nonprofit trustees is to make sure that all their investment assets are properly managed and protected, in order to serve the organization’s mission and goal. Despite the size of the investment assets, the committee in charge of the investments will look for ways to balance the goals of both ongoing funding and long-term growth of the nonprofit’s grant-making activities. In order to achieve their goals, trustees might seek guidance from third parties, whether it is for investment or legal advice. Hence, here are some situations in which an Outsourced Chief Investment Officer, or for short, OCIO can be a good choice:
1. Increased Complexity Overburdens the committee
Even the best professional can sometimes feel overwhelmed and stressed by the number of decisions they need to make in order to maintain difficult investment portfolios. The increased number of managers in portfolios, the increasingly volatile markets, and complex strategies can make it difficult for committee members to keep up and make good portfolio decisions. This is where an OCIO comes in. Trustees will have the responsibility of overseeing the OCIO provider, who then takes over the daily responsibilities of managing the nonprofit’s portfolio.
2. Challenges in Continuity
A lot of organizations have enjoyed the investment returns over the last decade. However, the memories of the 2008 crisis impact on the portfolio investments values and spending levels still remain. Whether they are swayed by single members of the committee or the memories of a single event lingers in their minds, committees can become susceptible to different dynamics over a period of time, especially when it is important to maintain a good approach to investing. According to the experts from Scoja Technology Services, an OCIO can provide institutional memory to the management and they will have the needed experience and perspective in order to adhere to a strategic approach for a longer-term.
3. Scale impedes growth
Smaller nonprofit organizations that have limited resources can often find themselves in a difficult position when competing with other, larger organizations. With the services of an OCIO who will manage their assets, smaller companies can be at the same level as larger nonprofits by showing that they have the same resources as a larger, professional organization, hence they will be able to have the confidence of the donors who will want to work towards accomplishing the charitable goal.
4. Time constraints limit the strategic focus
With limited resources, smaller nonprofits might find it difficult to meet their daily objectives and they do not get to spend their time focusing on larger goals. With an OCIO taking care of the daily investment responsibilities, boards and investment committees will have more time to focus and discuss strategic matters, such as reviewing their strategic frameworks and aligning their investments with the campaign and funding goals.
With the number of nonprofit organizations growing and with all of them competing for the same people (donors), it is important to take a step back and review your nonprofit needs, goals, and limitations. In order to focus and make the whole process easier, hiring an OCIO can make a big difference with your day-to-day operations.