OCIO 2.0: Strategic Investment Outsourcing for Nonprofit Organizations

By Bill Jarvis, Bank of America, an AGB Mission Sponsor June 15, 2023 September 17th, 2023 Blog Post

Opinions expressed in AGB blogs are those of the authors and not necessarily those of the institutions that employ them or of AGB.

By moving to an outsourced chief investment office (OCIO) relationship incorporating a true fiduciary standard, boards are striving to ensure their organizations’ investment portfolios are being managed according to the guidelines and goals they have set, while freeing time in the governance budget to use their fiduciary duty at a higher level.

Navigating the New Reality

In the current volatile investment environment, nonprofit boards of directors, investment committees, and staff face substantial and continuing challenges in carrying out their fiduciary obligations with respect to their organizations’ long-term investment pools.

Common issues include:

  • Increasingly complex and stringent legislation and reporting requirements
  • Higher expected standards in fiduciary management requiring new types of transparency
  • A greater level of scrutiny from regulators, donors, beneficiaries, and stakeholders
  • The push to optimize the use of scarce financial and human resources

This difficult environment has been exacerbated by:

  • The persistence of financial market conditions that have been characterized by exceptional macroeconomic policies affecting interest rates and the supply of money
  • Higher levels of portfolio complexity, driven in part by the desire to achieve prudent diversification
  • Increasing financial demands in response to societal stresses and higher mission-related costs and needs

Most nonprofit boards or investment committees meet four or five times a year. While in the past, this quarterly cadence may have been adequate to fulfill their responsibilities, the current environment, which frequently features sudden and large market moves in both positive and negative directions, renders this schedule, with its limited “governance budget” of time available to devote to investment matters, inadequate.

In this new paper, you will learn how outsourcing can help your institution to optimize its governance and staff resources, and how “2.0” services such as strategic consulting and policy support can help strengthen your board’s effectiveness.

Should you have any questions, please contact us.

Bill Jarvis is managing director, philanthropic executive at Bank of America. He can be reached at william_jarvis@bofa.com.

With Thanks to AGB Mission Sponsor: Bank of America

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