Operating a non-profit organization is no small feat. It takes stamina to continuously raise funds to serve our communities, all while creating a company that can sustain the mission for decades to come. It’s a marathon, not a sprint.

It’s not a solo journey, either. Your board, leadership team, staff, volunteers, and donors are the foundation, with their work amplified by partnerships with specialized professionals to lighten the burden and maximize results. With funding as the number one problem organizations face, there’s the need to find the right investment manager to help create an investment strategy that supports the financial results needed for the organization.

With that, it’s no surprise that an investment manager’s first responsibility is portfolio management. One that aligns with the organization’s withdrawal needs through selective asset allocation and risk management. While that’s the goal, the partnership between an investment manager and organizations can (and should) be more collaborative and worthwhile.

3 Must-have Traits of an Investment Manager

In our experience working with non-profit organizations of all sizes and causes, proper portfolio management begins before asset allocation. When working with an investment manager, there are several traits (or red flags) to take into consideration. Depending on your organization’s needs, the ranking in importance of each may vary, yet at the end of the day every investment manager should have these traits.

Trait 1: Demonstrates Fiduciary Responsibility
A foundational characteristic is fiduciary responsibility. An investment manager (and board members, for the record) must prioritize the non-profit’s best interests above all else, adhering to a high standard of service. This is accomplished through decisions that align with the organization’s mission, financial goals, and fostering trust and confidence in the partnership.

Putting this into practice, a manager should do its due diligence to understand the goals and needs of the organization. We like to conduct a Fiduciary Monitoring Report to gain a full picture and analysis of progress toward meeting their investment goals, as well as to determine if anything needs to change to stay on track for the future.

Trait 2: Commitment to Clear Communication and Relationship Building
An extension of the fiduciary duty is the relationship between both parties. Effective communication and the ability to build strong relationships may not make or break success, but it makes the journey there all the more fruitful. An approachable manager is one who listens, understands, and is accessible – all contributing to a collaborative environment, ensuring everyone feels informed and committed to the plan.

We have found that successful partnerships are the ones where the organization feels its manager is available. This goes beyond being present for regular updates and meetings by being willing to address concerns or questions when they arise. Are you seeking insight into the state of markets or a specific stock name? We have a team of investment analysts prepared to share. Want to educate your board and staff on planned giving and the state of donors today? We have a team for that, too.

Trait 3: Confidence in Their Investment Strategy
At the core of accessibility and expertise is the manager’s investment philosophy, process, and performance. While there are guiding regulations on how to – and to not – communicate, every firm has their own style of doing so. First and foremost, pay close attention to the philosophy and process – is it active and adaptable? What influences decision making? The access we provide to our entire investment team highlights our commitment to transparency and education on our active management approach.

As important as these traits are, red flags are just as telling. And performance reporting is one area to pay close attention to. Are they selective in the date ranges or benchmarks used? Are disclosures included and clear? Do you understand the performance results in addition to the story that accompanies them? All these are points of reflection of what type of manager is right for your organization.

At the end of the day, the partnership must work for the organization. For us, to have a successful partnership, investment managers should go beyond portfolio management, and non-profits should feel comfortable asking for more based on the evolving needs of the board and organization.

In fact, it’s best practice for investment managers to be evaluated every three to five years. When was the last time yours was evaluated? Consider conducting a Request for Proposal (RFP) to ensure you have the right investment manager on your team.

Please consult with an attorney or a tax or financial advisor regarding your specific legal, tax, estate planning, or financial situation. The information in this article is not intended as legal or tax advice.