Investment and Spending Policies

About this collection: This Content Collection includes resources describing how a foundation's spending policy and organizational objectives are linked to development of a cohesive and integrated investment strategy, as well as sample policies and other related advice.

A successful family foundation investment strategy depends on both a sound process and well thought-out, written policies. This Content Collection includes resources describing how a foundation’s spending policy and organizational objectives are linked to development of a cohesive and integrated investment strategy, as well as sample policies and other related advice.

Interested in aligning your investments with your values and mission? Please see the NCFP Content Collection on Impact Investing for additional information and resources.

Start Here: Developing an Investment and Spending Policy

Fashioning an Investment Strategy

Book Chapter
This chapter from 'Splendid Legacy' contains background, ideas, and suggestions to help family foundation boards develop investment policies and practices that meet legal requirements and are consistent with the goals and mission of their philanthropy.

Recommended Best Practices in Managing Foundation Endowments

Tool
While foundations differ in sophistication, resources, staff, and amount of financial resources, there are both specific responsibilities incumbent on foundation boards and generally accepted principles for investment management. These best practices are universal to effective management of investment portfolios as applied to fit the specific circumstances of each foundation.

Rethinking the Management of Foundation Endowments

Book Chapter
As the implications of the 2008–09 financial crisis for the world economy and markets have become clearer, many foundation executives and investment committees are reassessing their approach to endowment management. This essay reports on the effects of the recent turmoil on foundation endowments thus far, and offers lessons from the crisis …

Guidelines to help prudent investment committees

Sample
Seven guidelines for prudent investment committees emerge from this analysis of the determinants of a foundation endowment’s performance: 1. Delegate responsibility for as many investment decisions as possible to professionals. It is unreasonable to expect a part time, voluntary committee to deliver the same level of performance achievable by full-time …

Identifying and Working with Investment Advisors

Frequently Asked Questions

What is Mission Investing and is it Different from Impact Investing?

Article
Mission investments are made by foundations and other mission-based organizations to further their philanthropic goals. Mission investments (like impact investments) are intended and designed to generate both a measurable social or environmental benefit and a financial return.

What Kinds of Financial Expenses Do Not Count Toward the 5% Payout?

Ask the Center
With the exception of expenses for the management and product of income, all charitable expenses – including the cost of preparing the foundation’s 990-PF – count towards the payout. So, whether it’s rent, utilities, travel-related expenses, grants, contracts with consultants, or other such expenses – everything that you spend, other than …

Reducing Investment Costs

Tool
By reducing investment costs, a foundation board can often adopt a more conservative portfolio and still achieve the returns needed to maintain or increase purchasing power.

Sample Investment Policies

Investment Policy Statement Template

Sample
A template investment policy for adaptation and modification by the governing board of the institution in accordance with the particular needs and circumstances of the institution.

Fiduciary Responsibility and Investment Governance

Endowment Code of Conduct, CFA Institute

Investment Governance for Fiduciaries, CFA Institute

Investment Beliefs Statement, Initiative for Responsible Investment at Harvard University

The Changing Landscape of Fiduciary Duty, Principles for Responsible Investment

A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment, United Nations Environment Programme – Finance Initiative

Positions on Environmental, Social, and Governance, CFA Institute on ESG

NCFP Webinars

June 11, 2009

Managing Risk: Board Responsibilities for Prudent Investment and Governance

The Madoff scandal has caused the failure of well respected family foundations and raised the specter of penalties for board members' inattentiveness to investment matters. Is your board doing all it should to be fiscally responsible? In this timely teleconference, learn about the board's role and fiduciary duties in …

July 8, 2010

Managing Relationships with Your Legal, Financial, and Investment Advisors

Having the right advisors and working well with them makes it possible to successfully manage your philanthropic assets, comply with the law, and be an effective grantmaker. This webinar shares a variety of helpful tips for how to choose and evaluate advisors, how to maintain a good working relationship and …

Sample Investment Committee Job Descriptions and Charters

Policy Central: Board Committees

Sample
Board committee members make the necessary decisions and provide the day-to-day oversight needed to ensure that a family foundation board follows its fiduciary and legal responsibilities. See below for examples of the most commonly used foundation board committees.

Investment Committee Job Description (Lipscomb Family Foundation)

Sample
The Investment Committee is responsible for the oversight of the Foundation assets. The Committee is comprised of three members selected from the Board. The Committee is responsible for defining the investment objectives and policies for the Foundation’s assets, subject to the overall guidelines set forth in this Policy. It …

Sample Spending Policies

Spending policies and payout

Sample
Sam and Celia Sanders established the Sanders Family Foundation to share and continue a philanthropic legacy with their children and future generations. Sam and Celia did not intend to spend out the foundation, and named the foundation as a primary beneficiary of their estate. This case study explores how the …