Top 10 reasons charities and non-profits should use the OCIO model

September 15, 2015

I’m often asked why charities and non-profits should consider the Outsourced Chief Investment Officer (OCIO) model as a means of achieving better investment management for their organization. I have given this question a lot of thought and would like to share my personal “Top 10 Reasons” why the OCIO approach to investing is gaining momentum in Canada, and why it should be seriously considered by any organization looking to maximize their investment performance.

1. Informed decision making. It makes sense for Boards and nonprofit executives to provide their investment committees with access to more resources and information that will enable the
Investment Committee to make better decisions.

2. Fiduciary risk mitigation. A dedicated OCIO helps protect Boards from unintended fiduciary breaches that can result from “volunteer” oversight.

3. The stakes are higher. As pools of capital grow, even a small underperformance becomes material when compared to the efforts required to fundraise that money from donors. Portfolios
are monitored constantly by an OCIO.

4. Donors care. Donors want to know their donations are being invested well. Transparency and accountability are a critical part of effective investment management. An OCIO can turn your
investment strategy into a great fundraising story!

5. Volunteer resources are limited. Investment Committees simply lack the time, information and resources to develop and implement complex investment solutions.

6. Mmarkets are complex. Current market conditions require more sophisticated solutions that are developed over time and with proper resources.

7. Allows your Investment committee to focus on strategic issues. having an OCIO frees up your Investment Committee’s time, allowing it to focus on strategic issues. Through ongoing reporting, oversight and due diligence, an OCIO provides the information and advice your IC needs to eff ectively do its job.

8. Sound, strategic oversight. An OCIO can provide broad strategic oversight of the entire investment process. By unbundling the oversight function from the money management function, the OCIO model ensures sound investment management at a reasonable cost.

9. Independence. The OCIO is completely independent from the money management function, and will work only in the best interests of the organization.

10. Cost savings. The OCIO can assist with negotiating lower management fees and can provide insights into industry fee benchmarks. I hope you find this issue of FOUNDATIONS informative.

Please don’t hesitate to contact me with any questions or comments that you may have.article-pixel