Strategic investing is a core pillar of many organizations’ cash management efforts, especially when they’re prioritizing financial stewardship and long-term sustainability. However, most nonprofit leaders and board members aren’t trained in investment management strategies, which can make overseeing these investment activities feel daunting.

Fortunately, there are professionals who can help. In this FAQ guide, we’ll introduce you to nonprofit investment outsourcing and answer common questions about how it works. We’ll explore:

• What Is Nonprofit Investment Outsourcing?
• What Are the Benefits of Nonprofit Investment Outsourcing?
• What Services Are Provided by an Outsourced CIO for Nonprofits?
• What Are Typical Nonprofit Investment Outsourcing Fees?
• What Are the Nonprofit’s Responsibilities When Outsourcing Investment Management?
• Why Partner with an Outsourced Nonprofit CIO?
• How Do You Find a Mission-Aligned OCIO?

What Is Nonprofit Investment Outsourcing?

Nonprofit investment outsourcing is a strategic partnership in which an organization hires a fiduciary advisor to act as its chief investment officer (CIO), managing investment portfolios and strategies in line with the board’s policies.

An outsourced CIO (OCIO) can save your team time and headaches by taking over the day-to-day work of investment management, all while providing fiduciary oversight and regular, transparent reporting.

What Are the Benefits of Nonprofit Investment Outsourcing?

Beyond giving your team its time back, nonprofit investment outsourcing can offer several additional advantages, like:

Illustrative example — not actual performance; not indicative of future results.

• Improved cash management and reporting: Registered investment advisors (RIAs) who specialize in working with nonprofits can provide tailored cash management strategies that align with your organization’s unique needs and goals. Plus, they have dedicated reporting tools and procedures to keep your team in the loop at all times.

• Personalized investment management and support: An OCIO acts as a long-term partner for your organization, who can answer questions, get to know your unique priorities, and provide ongoing support as your needs change.

• Professional Investment Policy Statement (IPS) creation: If you don’t already have formal policies for investing, your OCIO can help you develop them as part of your partnership.

• Less risk for your board members: Board members have a fiduciary responsibility to work in your nonprofit’s best interest, but they don’t always have the knowledge necessary for responsible investment management. Outsourcing this duty to another fiduciary can help your board mitigate risk and increase confidence.

• Long-term help in meeting your financial growth goals: Wherever your organization is on its journey toward financial sustainability, a nonprofit OCIO can help. In addition to hands-on investment management, your advisor can provide access to helpful tools and strategies for long-term growth.

What Services Are Provided by an Outsourced CIO for Nonprofits?

The specific services provided by outsourced nonprofit CIOs vary, but they commonly include:

IPS Creation

A comprehensive investment policy statement is instrumental in keeping your organization’s investments in line with your priorities. A professional OCIO can create an IPS for you or update your existing policies to reflect industry best practices and any newly established strategies. As a fiduciary, they’ll also ensure that your organization adheres to those guidelines when managing your investments and spending returns.

Portfolio Creation and Rebalancing

The core service OCIOs provide is investment management, which includes designing strategic investment portfolios aligned with your organization’s preferred risk tolerance, liquidity needs, and timeline.

Depending on your needs, your advisor may focus on low-risk, high-liquidity investments, or suggest creating multiple funds for different purposes through a tiered investment strategy. Either way, they can work with your organization to create, manage, and rebalance your portfolio(s) as needed.

Ongoing Investment Monitoring & Reporting

Another key benefit of nonprofit investment outsourcing is improved reporting processes. OCIOs consistently monitor your investments and use standardized reporting tools and procedures, providing your team with clearer visibility into your funds’ potential growth.

In addition to monthly and quarterly reports, some outsourced CIOs for nonprofits even provide real-time dashboards so you can track investment activity at any time. For example, here’s a sample dashboard from the advisors at Infinite Giving:

Illustrative example — not actual performance; not indicative of future results.

When you work with Infinite Giving, our advisors provide ongoing transparency and access to an intuitive investment monitoring dashboard. From here, you can track the activity and growth of multiple funds, including your nonprofit’s endowments (if applicable). We also provide quarterly board reports, monthly statements, and end-of-year tax documents as part of our investment management services.

Bonus: Asset Donation Support

To help our nonprofit clients improve their overall financial strategies, Infinite Giving offers financial technology services with dedicated asset donation acceptance tools and support.

We provide branded non-cash donation pages that help organizations accept high-potential gifts like stocks, DAF grants, cryptocurrency, and endowments in addition to cash donations.

Accepting appreciated assets and other specialized donation types can help you attract larger donations and improve relationships with your high-capacity donors. By managing your investments and providing tools to diversify your revenue in one fiduciary relationship, Infinite Giving takes a comprehensive approach to improving your organization’s long-term financial health.

What Are Typical Nonprofit Investment Outsourcing Fees?

Nonprofit investment outsourcing fees vary depending on your chosen partner. Often, OCIOs charge an AUM fee, which is a set percentage of the assets under management. However, be on the lookout for additional fees for services like account setup and IPS creation. Your advisor may also require a minimum investment balance to use their services.

Infinite Giving charges a tiered AUM fee for investment management, with no added fees for account or policy creation. For more information about Infinite Giving’s pricing, visit our pricing page or request a personalized quote.

What Are the Nonprofit’s Responsibilities When Outsourcing Investment Management?

Typically, your nonprofit is responsible for providing the strategic input and guidelines your advisor will follow when managing your investments. That said, your organization’s responsibilities may vary depending on the specific CIO you choose.

Here’s a general overview of the responsibilities that nonprofit staff members and OCIO may take on:

• Board of directors: General financial oversight, review of financial statements and reports, internal control maintenance

• Nonprofit CFO (in-house or outsourced): Financial strategy, budget creation, cash flow forecasting

• Accountant (in-house or outsourced): Bookkeeping, monthly financial reporting, financial statement creation, tax form filing

• OCIO: Portfolio management, IPS creation, long-term cash management strategy and support

Why Partner with an Outsourced Nonprofit CIO?

There are several reasons a nonprofit might choose to partner with an outsourced CIO. Common motivators include:

Your team needs help managing existing investment portfolios

Many nonprofits that try to manage their own investments quickly realize their teams just don’t have the capacity to take a DIY approach. If you’re running into issues like reporting hurdles, confused board members, or a lack of direction for your investment strategies, a nonprofit OCIO can help.

Your organization has one or more endowments

Similarly, managing an endowment presents unique challenges for nonprofits that are unfamiliar with investment management. Whether your board decided to start a quasi-endowment or you received a gifted endowment from a major donor, partnering with an outsourced professional can simplify its management.

You want to prioritize financial stewardship

Even if your nonprofit has never invested funds or held an endowment, you can still work with an OCIO. Many organizations that outsource investment management are simply prioritizing fundraising stewardship. If you want to improve your nonprofit’s long-term financial health and sustainability but don’t know where to start, advisors like ours can provide tailored strategies and support.

How Do You Find a Mission-Aligned OCIO?

Finding the right CIO for your nonprofit often comes down to mission alignment. You want your fiduciary partner to share your organization’s vision and understand your goals.

To find an OCIO that aligns with your values, consider:

• Clearly defining your goals for the relationship before you start your search
• Sourcing recommendations and reviews from peer organizations
• Reviewing potential partners’ websites for experience with similar nonprofits
• Reading advisors’ case studies and contacting previous clients
• Asking plenty of questions about values, communication styles, and partnership goals

At Infinite Giving, we value integrity, understanding, and open, candid communication. Our financial advisors strive to do excellent work for our nonprofit clients, empowering them to thoughtfully steward their funds for sustainable growth.

Want to hear from one of our clients? Just check out our testimonial from South Lane Mental Health, or read the full case study to learn more about the results we achieved together:

“I love that Infinite Giving exists, focused on the unique complexities nonprofits face... this partnership has been wonderful. It’s never been more important for nonprofits to have a partner like Infinite Giving.”

-Andrew Yoder, South Lane Mental Health

Additional Resources

Overall, an outsourced CIO can serve as a trusted strategic partner in your nonprofit’s journey toward more sustainable, growth-oriented financial management. If you still have questions, don’t hesitate to reach out to our team and speak to a professional investment advisor.

Looking for more insight into nonprofit investment outsourcing and whether it’s the right fit for your nonprofit? Check out these additional resources compiled by our team:

• Nonprofit Investing: The Ultimate Guide to Grow Your Giving. Learn more about the basics of nonprofit investing to provide a strong foundation for your OCIO partnership.

• How to Start Endowments for Small to Mid-Size Nonprofits. Wondering if your nonprofit is too small to invest or create an endowment? Discover best practices for smaller orgs.

• Investing Consulting for Nonprofits | Infinite Giving. Explore our OCIO services in more detail to learn how Infinite Giving’s specialized fiduciary advisors can help your organization.

*DISCLOSURE

Infinite Giving Advisory Services, Inc. is an SEC registered investment adviser. Advisory services are only offered to clients or prospective clients where Infinite Giving Advisory Services, Inc. and its representatives are properly licensed or exempt from licensure. This content is solely for informational purposes.  Past performance is no guarantee of future returns.

Investors’ experiences may vary from the content. Nothing in this presentation constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Infinite Giving manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary.

Individualized responses to persons that involve either the effecting of transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption. Investing involves risk and possible loss of principal capital. No advice may be rendered by Infinite Giving Advisory Services, Inc. unless a client service agreement is in place. Donation services provided by Infinite Giving Technologies, Inc.

The information, opinions, and views expressed in this material are provided as of the date indicated and are subject to change without notice. No obligation is undertaken to update or revise this material to reflect events or circumstances occurring after the initial publication date.

The testimonial quote was provided by a current client of Infinite Giving Advisory Services, Inc. No cash or non-cash compensation was provided to the client in exchange for their statement. The client’s experience may not be representative of the experience of other clients.