How nonprofits are not holding back from an aggressive investment approach.
Nonprofit Investing Survey: Asset allocation trends in 2021
In an eﬀort to exist in perpetuity, nonprofit boards and investment committees have always had a great emphasis on investment performance and overall returns. While the stewards of the assets don’t necessarily have to answer to shareholders, their constituents are many, ranging from staﬀ to donors to benefactors. Their challenge is to leverage donor and organizational assets to generate investment returns that can cover expenses, exceed inﬂation, meet the overall missions they serve and preserve as much of the overall corpus as possible. This is usually done with a disciplined approach focused on strategic asset allocation; however, many organizations appear to be pursuing returns somewhat aggressively. Of all of the nonprofits surveyed, the average allocation to non-fixed income or short-term securities was 71%.
Nonprofits continue to maintain an aggressive investment approach in search of long-term returns.
Mean Asset Allocations:
The asset allocations discussed above are designed to drive expected investment returns. As nonprofit organizations face extreme pressure to do more with less, investment returns and funding the organization’s mission continues to be paramount to the organization’s success. While equity market performance over the past three years should have provided gains for many nonprofits, return objectives have remained stable and reasonable.
Return objectives for nonprofits surveyed ranged from as low as 2% to as high as 10%.
Since the alternatives’ origin of risk is less correlated with public markets, the intention of these investments is to provide returns more insulated from market ﬂuctuations, while increasing potential for returns in an otherwise low return environment for traditional stocks and bonds.
Nonprofit trustees continue to look for the most effective ways to be the best stewards of their organization’s assets and make sure those assets support the overall mission. For many, the time and resources needed to track the enormous array of investment products and managers is too much for investment committees that often meet only on a quarterly basis. As a result, almost a third (31%) of all nonprofits surveyed saying the investment committee is concerned about the resources required to perform the necessary due diligence around
This information is provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company (SEI). Investing involves risk including possible loss of principal. There can be no assurance that your investment objectives will be achieved nor that risk can be managed successfully. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Bonds and bond funds will decrease in value as interest rates rise. High yield bonds involve greater risks of default or downgrade and are more volatile than investment grade securities, due to the speculative nature of their investments.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only and should not be interpreted as legal opinion or advice.
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