The Fundamentals: Transitioning to an OCIO Model

When a not-for-profit organization decides to implement and transition to an Outsourced Chief Investment Officer (OCIO) relationship, they are choosing an approach that will be customized to their specific objectives. Built upon a foundation of quality risk and return analytics, indepth investment manager qualitative due diligence, ongoing reporting and comprehensive advice, the not-for-profit can make informed decisions to evolve their portfolio into one that reflects their overall investment needs. This is a gradual process built on trust, easing any anxiety that an Investment Committee (IC) or staff may have with the decision-making process. And, of course, the outcome is improved knowledge of your portfolio and individual managers, as well as your portfolio’s risk/return characteristics.


Generally speaking, an OCIO engagement begins with giving the not-for-profit three years of prior investment returns for the not-for-profit’s review. This is the starting point for an IC to be able to understand the historical risk/return characteristics of their portfolio, which will help in making better decisions in the future. This review reveals how each of their investment managers is actually performing against both relative benchmarks and peer groups. At the end of the day, the OCIO is able to educate, advise and propose changes to the not-for-profit’s asset allocation, investment manager selection or replacement, cash flow needs (disbursements) and the possible introduction of new non-correlated asset classes.

The OCIO also finds ways to increase a not-forprofit organization’s capacity by reducing their workload. This may mean helping the IC and staff manage the documentation requirements or fee negotiations of the investment managers and custodians (in many cases, the savings that result from these changes can offset a portion of the OCIO fee), along with informing existing investment managers that their expertise is no longer required. Many times, not-for-profits find these phone calls quite difficult because of the long-term relationships that have been established between the organizations. As an impartial third party, it is much easier for an OCIO to relay the IC’s decision to replace the investment manager.

“The OCIO also finds ways to increase a not-for-profit organization’s capacity by reducing their workload.”


Inevitably, having new, quality information allows IC members to make sound decisions that result in improved risk/return characteristics. That is the ultimate OCIO value proposition! Also, in today’s climate of increased transparency and accountability, the fiduciary responsibility of a volunteer IC to the donors of the not-for-profit organization is paramount. It is imperative todemonstrate the type of disciplined and consistent approach that is inherent to the OCIO model.


A common characteristic of the religious organizations, private schools, hospital foundations and national heritage organizations that BULLWEALTH tends to advise is a willingness to be open to doing something different. The OCIO is a significant platform in the U.S. In Canada, however, many not-for-profits are just learning about the benefits of engaging an OCIO like BULLWEALTH. If your endowment is in the range of $20-$100 million, you are in a good position to benefit from an OCIO relationship. At this level, BULLWEALTH can build a portfolio and offer advice that will add value to your investment portfolio and your overall not-for-profit organization.

“…the fiduciary responsibility of a volunteer IC to the donors of the organization is paramount.”


In addition to the services we commit to providing to our not-for-profit clients, we also give back 10% of our fees through various fundraising channels. At times we find ourselves giving advice on fundraising, participating in community volunteer days or providing guest speakers on a variety of related investment topics. We are happy to pitch in whenever it is needed. These additional services are not itemized in our agreement, but are instead part of the overall OCIO experience that BULLWEALTH offers. article-pixel