Foundations are unique entities that can provide a powerful way for families to share their values through meaningful and lasting social good. Investment managers play a critical part in guiding decisions around how best to utilize funds for maximum impact. In this blog post, we will explore the role of investment managers, how they shoulder the responsibility of managing family investments, and the benefits of hiring one for your foundation. With these insights, you will be equipped with knowledge that can ultimately help you create more sustainable success in philanthropy.

Overview of Investment Managers and Their Role in a Family Foundation

An investment manager is a vital component of a family foundation’s success. The primary responsibility of an investment manager is to oversee the foundation’s assets and make sound investment decisions in line with the foundation’s values and mission. This role requires investment managers to possess a broad and deep understanding of finance, the ability to navigate risk and uncertainty, and the skills necessary to communicate complex investment strategies to stakeholders.

An investment manager’s success is judged not only by financial performance but also by their ability to align investments with the foundation’s overall social impact objectives. It is essential for them to take a holistic approach to investment management and understand the many effects of their decisions. With insight and understanding, they can identify assets that can maintain or increase their value over time. Additionally, it is important that the investment manager analyzes financial data, forecasts trends, and identifies potential threats and opportunities in the market.

In addition to asset management, investment managers often engage with family members to ensure that investments reflect the family’s shared priorities and goals. They provide investment education to the family and keep them informed about the investment status of the foundation. By doing so, the investment manager establishes reliable communication channels to build trust and strong relationships with the family.

How to Choose an Investment Manager for Your Foundation

Choosing the right investment manager for your family foundation can be a critical decision, one that can have a significant impact on your foundation’s financial performance and social impact. First and foremost, a good investment manager must be competent in various aspects of investment management, including asset allocation, risk management, and portfolio diversification. The investment manager must have a solid understanding of the market trends and factors that could influence investment, both in the short and long term. They must be able to develop effective investment strategies based on the foundation’s priorities, goals, and objectives. Ultimately, selecting the right investment manager for your family foundation requires a thorough assessment and review of the individual’s experience, professional qualifications, and track record. The selection process may also require more extensive due diligence, including background checks, client references, and an in-depth evaluation of their investment strategy.

It is essential to choose an investment manager who can work closely with the family and keep them informed about the investment status of the foundation. In this regard, the investment manager should be open, transparent, and willing to provide regular updates on the progress of investments.

Furthermore, consider selecting an investment manager whose values and mission align with those of your family foundation. A shared investment philosophy and a values-based approach can contribute to sustainable growth, so it can be beneficial to work with an individual who understands and respects your foundation’s objectives.

Before hiring an investment manager for your family foundation, consider the following questions:

  1. What is the investment manager’s professional experience, education, and credentials? Are they certified by any reputed financial industry organization?
  2. What is the investment manager’s overall philosophy for managing funds, and does it align with our foundation’s values and mission?
  3. What specific experience does the investment manager have in managing assets for family foundations?
  4. What is the investment manager’s strategy for diversifying the foundation’s portfolio and minimizing exposure to risk in volatile markets?
  5. What is the investment manager’s depth of knowledge and experience in evaluating alternative investment opportunities, such as private equity or real estate?
  6. Does the investment manager have a robust risk management system in place to protect against potential financial losses?
  7. Will the investment manager be able to provide clear and concise reports on the foundation’s investment performance and progress toward meeting our financial goals?
  8. What is the communication style of the investment manager? How does the investment manager work with multiple stakeholders, family members, trustees, and financial advisors?
  9. What measures does the investment manager have in place to ensure transparency and accountability in managing our funds?
  10. How does the investment manager stay abreast of current market and economic trends and adjust investment strategies accordingly?
  11. How does the investment manager balance short-term and long-term investment objectives, and what is their approach to managing liquidity within the portfolio?
  12. Can the investment manager provide references or testimonials from other clients or family foundations?
  13. Does the investment manager have any conflicts of interest with the foundation or its stakeholders?
  14. What types of investments does the investment manager prioritize (e.g., stocks, bonds, real estate, alternative investments)? Are these investments socially responsible or ESG-aligned?
  15. What is the investment manager’s fee structure and how does it compare to other firms in the market? Are there any hidden or additional costs?

Assessing the Performance of Your Family Foundation’s Investments

Performance assessment is a key aspect of managing a family foundation’s investments. One strategy for assessing investment performance is to regularly track the returns of your portfolio. Work with your investment manager to analyze return on investment (ROI) and volatility, which help provide insight into the effectiveness of your investment strategy. Modern investment tools can help you compare investments against industry benchmarks in real time, making it easier to identify and adjust poorly performing assets.

It can also be beneficial to have a comprehensive understanding of the investment’s objectives and compare associated costs and fees. The costs can erode investment returns over time, so knowing the fee structure is crucial for investing in the right assets.

It is also important to establish clear philanthropic goals and ensure that your investments are aligned with these objectives. Review your investments regularly to ensure that they align with your foundation’s overarching mission and values. Additionally, keeping a finger on the pulse of the financial world can help family foundations develop a broader perspective and recognize emerging opportunities. By developing a strong understanding of market trends, family foundations can work in concert with their investment manager and make strategic decisions to optimize their portfolios.

In conclusion, hiring an investment manager is an important step in managing the financial assets of a family foundation. The role of the investment manager is to advise on investments that are suitable for meeting the foundation’s objectives and goals while seeking to protect and grow its capital. Investment managers possess an in-depth understanding of the different types of investments and can create a diversified portfolio that maximizes potential returns while mitigating risk to some degree. Moreover, they can develop a strategic plan for monitoring performance, keeping family members and other stakeholders informed at all times.

MTC Investment Management for Foundations and Charities

Hiring a trusted investment manager can be one of the smartest decisions that you make for your foundation. At Members Trust Company, we understand the importance of taking a holistic approach to managing your investments. We work closely with our clients to understand their unique needs, goals, and objectives. We utilize innovative investment strategies to generate returns while minimizing risk.

Expertise and Experience: With years of experience managing investments for family foundations, Members Trust Company uses its expertise to achieve strategic goals. We have a deep understanding of financial markets and stay up-to-date on trends and changes in the industry. By working with us, you will have access to a team of portfolio managers and fiduciary professionals who are dedicated to helping you achieve your philanthropic goals.

Collaborative Approach: One of the hallmarks of Members Trust Company is our collaborative approach. We work closely with our clients to create customized investment strategies that meet their unique needs and objectives. We listen to your goals and provide guidance and advice every step of the way. This collaborative approach ensures that you are always in control of your investments while benefiting from the support and guidance of our experienced team.

Commitment to Transparency and Accountability: At Members Trust Company, we believe in transparency and accountability. We provide regular reports to our clients, detailing the performance of their investments, and are readily available to meet with all family members and stakeholders. We encourage open and honest communication, so that you always know where you stand.

Hiring Members Trust Company as your investment manager can help you optimize your foundation’s financial health and achieve your philanthropic goals. With our expertise, collaborative approach, innovative investment strategies, and commitment to transparency and accountability, we are ready to be the trusted partner for your family foundation. For more information, contact us.

Non-deposit investment products available through Members Trust Company are not deposits of or guaranteed by the trust company, a credit union or credit union affiliate, are not insured or guaranteed by the NCUA, FDIC or any other governmental agency and are subject to investment risks including possible loss of the principal amount invested. Members Trust Company, owned and managed by America’s credit unions, is a special purpose federal thrift regulated by the Office of the Comptroller of the Currency. Past performance is not indicative of future results. This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant. Any opinions expressed are those of the presenter and do not necessarily reflect the position of Members Trust Company. The information above is obtained or compiled from sources we believe to be reliable. We Do Not Guarantee that such information, will be free from errors, omissions, whether human or mechanical, nor do we guarantee their timeliness, accuracy, or completeness.