Common Challenges for Non-Profits

If you manage a nonprofit organization, or your own family foundation, it’s likely your primary mission is to strengthen the fabric of the community in which you live. This commitment to the local community by nonprofit organizations has had a major impact on the culture of the United States.

There are three challenges that all non-profits face:
  1. The management of the portfolio’s assets to ensure the continued accomplishment of the organization's mission. Ours is a world of complex financial issues requiring more data, more time and more expertise than most of us have in order to manage assets prudently. If you have responsibility as a fiduciary with a nonprofit organization, the term "prudent" has special meaning. Common law requires trustees to show the same care and degree of prudence as any competent investor.
  2. Private foundations also face required distributions each year, while public nonprofit organizations face the problem of endowed funds under the Uniform Prudent Management of Institutional Funds Act (UPMIFA) falling below their historical dollar value.
  3. Providing dollars for future beneficial projects that are not eroded by inflation. (This requires constant review of the portfolio structure so the value of the fund keeps pace with inflation as well as the dollar value of future grants.)
At The Wert Investment Consulting Group of Wells Fargo Advisors, we specialize in guiding fiduciaries through the maze of difficult financial decisions that must be made daily. We employ a process that has helped institutions:

Develop

Develop sound, effective investment strategies and spending policies in the face of rapidly-changing global capital market environments.

Hire

Hire competent, professional investment managers with time-tested track records of success.

Monitor

Monitor the growth of assets, fund performance, and manager track-records relative to the risk-adjusted goals.

Recommend

Our team will recommend changes as managers evolve or organizational goals shift.

The Investment Policy Statement

As consultants to your portfolio, we review with you the goals, objectives, guidelines and risk tolerance for the assets being managed. We believe that development and review of the investment policy statement is the single most important step in achieving investment success; it is the blueprint for the entire investment program, establishing the direction for all investment-related activities.

Key components we look for in an investment policy statement:
  • Statement of the role of fiduciaries in the investment process.
  • Statement reflecting the responsibilities of the investment manager in the investment process.
  • Clearly-stated investment objectives.
  • Acceptable asset classes specified.
  • A defined asset allocation policy.
  • Delineated risk tolerance of the fund (i.e., liquidity, quality).
  • A clearly defined method of gauging success of fund/managers.
  • A statement of the time horizon for achieving goals.

A written investment policy statement is an important tool providing the client with realistic targets for future investment performance and a means for judging the quality of the results. For many of our clients, the trustees and key decision- makers may change over the years. The investment policy statement remains a constant reminder of decisions made and objectives desired and may serve as a valuable training tool for newly appointed trustees.

Reporting and Review

All of the efforts of a good consulting process are meaningless if you are provided with inadequate performance records and poor communication of results. Our quarterly performance monitoring includes information necessary for us to fulfill our responsibilities as a fiduciary, and to provide the other fiduciaries with a report that is presented in a logical and concise format. Our report includes the following components:
  • Capital Markets Review — Provides an overview of the economy and the capital market environment for the preceding quarter as well as year-to-date, and annual period information.
  • Executive Performance Summary — Includes portfolio-level performance compared to custom and absolute benchmarks as well as manager-level performance compared to style-specific benchmarks across all applicable time periods.
  • Asset Allocation Summary — Illustrates comparison of the target policy allocation and the actual portfolio allocation at the current quarter end date.

Your Goals and Dreams, Our Guidance

You are pursuing your financial goals and deserve someone who can help you with advice and guidance. We are here to listen and help you plan for your future with confidence. We are backed by the resources, expertise, and investment selection of one of the nation’s most recognized financial services companies. Let us help you develop an investment strategy that is flexible and tracks your goals.