A nonprofit’s dilemma: consultant or outsourced CIO? Consider size, budget, and desired level of involvement.
Foundations and endowments often face a crucial question when outsourcing their investment policies: Which category of investment professional is best? While there are several options, an investment management consultant and an outsourced chief investment officer (OCIO) are viable choices that can offer valuable services to a nonprofit organization. Each has distinct roles and qualifications. Here are some potential advantages and disadvantages to weigh:
Sometimes working alongside a nonprofit’s internal team or existing investment manager(s), an investment management consultant typically provides advisory services related to risk management, investment policies, and portfolio construction. An experienced investment management consultant can add value in several distinct ways:
Compared with an investment management consultant, an OCIO typically has a more comprehensive role in helping a nonprofit navigate financial markets and planning. This holistic approach differs from consultant services in several ways:
Both an OCIO and an investment management consultant can contribute valuable insights to help a nonprofit adhere to regulatory requirements and align its investment strategy with organizational objectives. While choosing one or the other can be a challenge because there’s no one-size-fits-all solution for every organization, here are some factors to consider:
In summary, the choice between an investment management consultant and an OCIO often depends on the specific needs, resources, and preferences of the nonprofit organization. Each option has its advantages and disadvantages, so careful consideration should be given to determine which service aligns best with the organization’s goals and constraints.
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