Investment Committees Should Be About Stewardship and Not Just Market Performance [SUBSCRIBERS-ONLY]

Investment committees are often judged by how well the investment portfolio performed as compared to the market. However, investment committee responsibilities are much broader than just monitoring market performance. Nonprofit organizations will be better off if they design and focus investment committee protocols, policies and working rules around the primary role of stewardship of the organization’s long-term investment assets.

“Stewardship” has been defined as “the careful and responsible management of something entrusted to one's care,” and “the acceptance or assignment of responsibility to shepherd and safeguard the valuables of others.” These definitions resonate because of the tone reflected in the words: responsible planning, management of resources, shepherd, and safeguard.

Maintaining optimal long-term investment growth is one of an investment committee’s key goals. However, a narrow focus on this one metric can lead organizations and investment committees to lose sight of the broader set of principles inherent in the stewardship role, such as safeguarding the organization’s investment assets, maintaining open and active communication channels, and establishing responsible asset allocation and spending guidelines.