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Simple Investing for Nonprofits
“We probably get three or four calls a month from institutions
that have $10 million to $30 million and don’t know what to do,” said D. Ellen Shuman, who oversees Edgehill Endowment Partners, which manages about $650 million in nonprofit money.
That’s why Larry Kochard, who oversees the University of Virginia’s $8.6 billion endowment
and sits on the board of the $18 million Virginia Environmental Endowment, says the simple solution, equity and bond index funds, makes sense for smaller institutions.
“It was natural to keep them in low-return funds since the money was being spent down.”
Many nonprofits have to think much longer term, however, and don’t have the luxury of holding all of their assets in a single low-risk asset class
The foundation’s president, Vartan Gregorian, said it still gave money to “the arts, women’s rights, religious
and ethnic tolerance, freedom of speech and strengthening American democracy,” all causes that were important to Ms. Birch.
When considering whether to hold hedge funds, which often do not allow immediate liquidation of investments,
many nonprofits may need to examine whether they can afford to forgo access to their money for long periods.
“The odds of a small endowment finding the right managers are very slim,” Mr. Kochard said.