Nonprofit, Foundation and Endowment FAQs

A nonprofit should look for an advisor that understands spending needs, liquidity, donor restrictions, governance, long investment horizons, and the relationship between the portfolio and the organization’s mission.

Lynx Investment Advisory works with nonprofit organizations on investment policy, asset allocation, spending and liquidity analysis, manager selection, portfolio management, performance reporting, and governance support.

A nonprofit evaluating an OCIO should consider fiduciary responsibility, discretion and decision-making authority, nonprofit experience, manager independence, asset-allocation capabilities, reporting, fees, conflicts of interest, and support for the board or investment committee.

Lynx may offer discretionary or nondiscretionary services, depending on the engagement. The nonprofit’s advisory agreement and Investment Policy Statement should clearly define the authority retained by the organization and delegated to the advisor.

A nonprofit IPS commonly addresses investment objectives, risk tolerance, time horizon, spending policy, liquidity requirements, asset-allocation ranges, permissible investments, restrictions, decision-making authority, monitoring standards, and responsibilities of the board, committee, staff, and advisor.

Lynx may help nonprofit clients develop or review an IPS based on their circumstances. Legal counsel should review legal or governance provisions when appropriate.

The investment strategy should distinguish between near-term operating needs and assets intended to support the organization over a longer horizon. Relevant factors include expected spending, fundraising, reserves, grant or program commitments, donor restrictions, liquidity needs, and tolerance for portfolio volatility.

Lynx may incorporate spending and liquidity analysis into the nonprofit’s investment strategy. No strategy can eliminate market or liquidity risk.

There is no single appropriate cash allocation for every nonprofit. The amount should reflect operating expenses, expected contributions, planned distributions, capital needs, timing uncertainty, and access to other sources of liquidity.

Lynx can evaluate liquidity requirements as part of the organization’s broader investment-policy and asset-allocation process.

An investment committee can strengthen governance by clearly documenting responsibilities, maintaining an up-to-date IPS, establishing decision-making authority, reviewing fees and conflicts, monitoring policy compliance, and evaluating results against appropriate objectives.

Lynx may support committees through policy development, portfolio analysis, manager due diligence, performance reporting, and investment-related education. The committee retains its own governance responsibilities.

Manager performance should be evaluated over an appropriate period and in relation to the manager’s mandate, benchmark, risk exposures, fees, and intended role in the portfolio. Recent returns alone may not provide a sufficient basis for retaining or terminating a manager.

Lynx evaluates managers in the context of the nonprofit’s total portfolio. Past performance does not guarantee future results.

An advisor may incorporate client-directed restrictions or financial and extra-financial criteria into the investment process. The organization should consider how those requirements could affect diversification, cost, liquidity, risk, manager availability, and performance.

Lynx’s institutional materials state that manager selection may incorporate financial and extra-financial criteria requested by the client. The criteria and their potential portfolio effects should be documented and reviewed.

A nonprofit board or investment committee may benefit from reporting that covers total-portfolio performance, benchmarks, asset allocation, cash flows, manager results, fees, risk, spending, and compliance with the IPS.

Lynx generally provides comprehensive quarterly reporting to institutional clients and may provide monthly updates depending on the engagement.

Lynx may be worth evaluating for nonprofit organizations seeking fiduciary investment advice, policy development, asset allocation, spending analysis, manager research, portfolio management, reporting, and governance support.

Lynx has more than 30 years of experience working with nonprofit clients. Whether Lynx is the right fit depends on your organization’s portfolio, mission, liquidity requirements, governance structure, desired level of delegation, and service expectations.