Considerations for Hiring an OCIO—Take the “T” Test

By Erika McDaniel, Glenmede, an Exponent Philanthropy Platinum Sustaining Partner

The term Outsourced Chief Investment Officer (OCIO) has gained popularity in the investment industry as investment consultants, banks, and small wealth management firms are now offering OCIO services to foundations, endowments, and nonprofits.

You may be considering this model instead of the self-managed or consultant model used in the past.

Below we include the “T” test to help your organization evaluate potential OCIO providers.


Does the OCIO have an investment philosophy and process that is time-tested, disciplined, and proven?

Your OCIO should have an investment philosophy that is well-articulated, research-driven, and time-tested as well as an investment process that is explainable, repeatable, and disciplined. The strongest OCIO firms can clearly explain where ideas are generated, who evaluates ideas, and how portfolios are constructed. Their philosophy and process should prove consistent over the long term, not wavering or chasing the latest fad.


Does the OCIO have a team of experts solely dedicated to serving organizations that are similar to yours—in size, scope, mission, goals, objectives, and time horizon?

OCIOs that lack depth of team, show high levels of instability and turnover, or have a retail focus should raise flags during your evaluation. It is important to find a partner who has deep understanding of the unique challenges faced by charitable organizations and is able to leverage a multitude of resources to help you meet those challenges.


Is the OCIO transparent about the services offered to your organization and the fees associated with those services?

During your evaluation the OCIO should be clear and transparent about fees; it should be easy to understand account-level fees, underlying manager fees, and any additional fees that may be assessed based on the services provided.

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Dispatch From the Mission Investing Institute: Measurement

Originally published by Mission Investors Exchange (June 2017)

This newsletter is coming to you from Troy, Michigan, where we are on day three of our over-subscribed Mission Investing Institute. Scores of foundation leaders and mission investing experts have been convening here at The Kresge Foundation* headquarters since Monday, focused on how to activate around impact investing.

There have been many themes emerging throughout the Institute. One of the most popular among newcomers and seasoned investors alike is measurement. How do you measure impact, both social and financial? Must we agree to tradeoffs on mission or money? What standards are there? How can we respond to skeptics within our foundation? And so on.

“People are getting stuck when it comes to measurement,” founder and senior advisor of ORS Impact Jane Reisman, Ph.D., told attendees. “The good news is that slowly but surely, forward-thinking foundations are beginning to report out on their experiences and returns, with help from intermediaries. Their trials are becoming models for others seeking justification for their impact investments, as they build a case for full board support.”

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Meet the World’s Largest Impact Investing Network

By Meredith Martindale, Investors’ Circle, an Exponent Philanthropy Professional Partner

Investors’ Circle (IC) is the world’s largest and most active impact investing network and has invested over $200 million into more than 330 enterprises dedicated to improving the environment, education, health, and community. The organization was founded in 1992 by a group of successful social entrepreneurs who shared a desire to increase the flow of capital to the next generation of mission-driven companies.

Over the years, IC has worked with other leading organizations, including the Ford Foundation, F.B. Heron Foundation, Kellogg Foundation, and Rockefeller Foundation to build both mission- and program-related investing knowledge base. As IC brought together thought leaders, new initiatives were conceived and incubated, including sector leaders B Lab, Slow Money, and the Patient Capital Collaborative.

In 2009, IC introduced a local network strategy with Philadelphia being the flagship network. Since then, local networks are now active in five other geographies around the country: Boulder-Denver, Boston, New York, Raleigh-Durham, and Washington, DC.

Though the organization is headquartered in Durham, NC, its 230+ members are spread across the country and convene regularly at in-person pitch meetings and investor education workshops.

What is IC’s key to success over the past 25 years?

Our members. 

As such, I’m delighted to introduce you to Annarie Lyles, an IC lifetime member and current president of the IC Philadelphia Local Network.

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Why Foundations Should Reconsider Warren Buffett’s Advice

By Jeff Cohen, CAIA, Sonen Capital, an Exponent Philanthropy Silver Level Sustaining Partner

It is a risky proposition to take issue with any advice offered by Warren Buffett.

Recently Marc Gunther, a notable philanthropy and sustainability reporter, wrote an article entitled Warren Buffett Has Some Excellent Advice For Foundations That They Probably Won’t Take. In the article, Mr. Gunther quotes part of the renowned investor’s annual letter: “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.”

Moving past the understandable issue Mr. Buffett has with high-priced investment managers, the endorsement for investors to stick with low-cost index funds is a more nuanced point, particularly as it relates to mission-driven foundations.

I do agree that investors who are purely seeking the best risk-adjusted rate of return net of fees should seriously consider low-cost index options. When it comes to foundations, however, one must first consider the reason foundations exist. That reason is to affect some form of positive social or environmental good, and not to achieve best-in-class investment returns.

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Ready to Be an Impact Investor? Move Slowly, Stay Curious

This post is an excerpt from the complimentary resource Essentials of Impact Investing: A Guide for Small-Staffed Foundations, created by Exponent Philanthropy and partners Mission Investors Exchange and Arabella Advisors. Want to align your investments with your mission? Download your copy >>

By Lucy Cantwell, New Belgium Family Foundation

Many people are beginning to intuitively grasp the promise of impact investing but struggle with how they might participate. Finding a balance between the traditionally “hard” skills of finance and the “softer” considerations of impact is an opportunity for foundations and advisors alike.

We started, as many foundations do, by incorporating the beliefs and intent of our founder. Kim Jordan started the foundation with her family after New Belgium Brewing Company— the company she co-founded and runs as CEO—became 100 percent employee-owned through an employee stock ownership plan in 2012. In addition, the company has a long history of environmental and socially responsible practices, and we wanted to ensure the foundation would reflect that history. We knew that we wanted to pursue impact investing, as it dovetailed with Kim’s belief in the transformative potential of business, but we didn’t know how to execute that vision.

Interviewing investment advisors and learning each of these groups’ definitions of impact investing helped us articulate our own goals. Although financial return was important to us, we cared more about maximizing our potential impact—a surprise to many advisors. We realized that a 100 percent commitment to impact for our then $7 million portfolio was essential—a way of activating our 95 percent as well as our 5 percent payout. We wanted to support thoughtful businesses like the one created by Kim, and we also wanted to help signal to the mainstream financial system that there are investors who privilege value creation that goes beyond shareholder value. During this time we also refined the core values of the foundation and added an emphasis on taking risks and collaboration. After talking with potential advisors, and learning what leeway there was to support our vision of impact investing, we settled on a boutique impact investment firm to manage our corpus.

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Top 16 Posts of 2016

We thank all our readers and the many funders and colleagues who lent us their voices this year. We were pleased to do our part to inform and inspire your giving with these popular posts and many others.

The Case for Investing in Nonprofit Talent
Funders’ signals often encourage nonprofits to deemphasize staff development and stress programs and projects instead.

Changing the Culture of Philanthropy: Building a Movement to Fund Real Cost
Insufficient infrastructure and limited resources don’t lead to impact.

My Family’s Foundation Entered the Policy Arena, and We Are Not Looking Back
As a philanthropist, your voice carries tremendous weight in the policy arena.

Philanthropy Lessons: Who Knows More?
Hear from leading philanthropists about building respect and trusting the people working day in and day out on the complex issues we care about.

There’s No Such Thing as Nonprofit Sustainability…and What To Do About It (Part 1) and (Part 2)
What is the role of funders in the lively topic of sustainability in the nonprofit sector?

Impact Investing: Making the Case to Your Trustees
For foundations, the early stages of impact investing lie at the board level.

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Impact Investing: Impact Measures and Monitoring Tools

This post is an excerpt from the complimentary resource Essentials of Impact Investing: A Guide for Small-Staffed Foundations, created by Exponent Philanthropy and partners Mission Investors Exchange and Arabella Advisors. Want to align your investments with your mission? Download your copy >>

By Christa Velasquez, University of Chicago 

So much time and effort is focused on getting an impact investment closed and the funds disbursed. However, executing an agreement isn’t the finish line and, in fact, it may not even be the halfway point. Post-closing, there is still a lot of work to do in monitoring the performance of an investment to ensure financial health and intended impact.

Monitoring the performance of your investments ensures alignment with your foundation’s objectives, communicates expected and achieved impacts, ensures consistency among reported data, allows for performance measurement over time, and helps to identify the right questions for investors to ask. Unlike traditional investors that measure only their financial returns, impact investors track both the financial and social impact performance of their investments.

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Impact Investing: A Foundation’s 15-Year Journey to Catalytic and Direct Investments

This post is an excerpt from the complimentary resource Essentials of Impact Investing: A Guide for Small-Staffed Foundations, created by Exponent Philanthropy and partners Mission Investors Exchange and Arabella Advisors. Want to align your investments with your mission? Download your copy >>

By Jesse Fink, The Fink Family Foundation

When my wife, Betsy, and I formed the Betsy and Jesse Fink Foundation [now The Fink Family Foundation] 15 years ago to help solve large-scale environmental problems, we were faced with a big question: how could a foundation of our size be impactful when hundreds of billions of dollars are needed to achieve our mission globally?

We started with two core principles. First, as former entrepreneurs, we wanted to be catalytic—to take risks to prove new models, so that larger funders with less risk tolerance would feel able to adopt them, too. We focused most of our funding on seeding new organizations and pilots in the Northeast, where we have strong local relationships and knowledge.

Second, we recognized that the scale of environmental problems dwarfs available philanthropic capital, so we needed to find impact leverage wherever possible. This led us to invest in scalable solutions, such as innovative business models, technology, human capital, and market-based solutions. Once we began supporting market-based solutions programmatically, we recognized that we could also push the field forward through impact investing (which we called “issue-based investing” before there was a common name for it).

We first researched and implemented a half dozen PRIs, including more traditional loans for low-risk land conservation projects, as well as higher risk loans for unsecured food hubs and food recovery projects. We also made a few small investments in third-party funds focused on clean energy. We learned from some of the failures and saw the huge potential of the successes, and decided to make mission-aligned impact investing a core of our work.

Recently, we asked our long-term trusted advisor Mark Cirilli, co-founder and managing director of the impact investing advisory firm MissionPoint Capital Partners, to help draft a comprehensive impact investment strategy and policy for our foundation. The resulting document, built in partnership with our trustees and team, codified a few core values that have driven our work:

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Impact Investing: Where to Source Investments?

This post is an excerpt from the complimentary resource Essentials of Impact Investing: A Guide for Small-Staffed Foundations, created by Exponent Philanthropy and partners Mission Investors Exchange and Arabella Advisors. Want to align your investments with your mission? Download Essentials of Impact Investing: A Guide for Small-Staffed Foundations >>

By Cynthia Muller and Catherine Toner, Arabella Advisors

For the 90-year-old Edward W. Hazen Foundation, making impact investments was not a question of if, but how. The board was eager to more closely align the foundation’s investment portfolio with its mission. With the corpus entirely in screened investments, the board had voted to allocate $1 million, or 5 percent of its total corpus, whichever is less, to test mission investing—but found it challenging to identify transactions that met its criteria.

The foundation found [its first investment]—as well as two other potential transactions that are in the pipeline—thanks to the board and staff’s efforts to solicit suggestions from peers.

To successfully invest for impact, you’ll need a steady pipeline of investable transactions. Because the field is relatively new, finding investment opportunities that are aligned with a foundation’s interests and goals often requires extra effort and effective collaborations with colleagues, partners, and advisors. Foundations active in impact investing point to a number of ways you can find or develop investable opportunities:

Conduct a landscape scan. This will identify fund managers or investments that are aligned with your foundation’s investment criteria (investment, program, geographic requirements). Peer funders are especially helpful to speak to when identifying specific investment opportunities within your area of interest. Industry platforms such as ImpactBase, Aeris, ANDE, and ImpactSpace are good resources as well. If you are able to identify specific opportunities through these resources, the next step is to have a conversation to clarify if the fund manager or organization is actively raising funds and the timeline for possible investment.

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Impact Investing: Best Practices for RFPs

In 2015, Exponent Philanthropy and partners Mission Investors Exchange and Arabella Advisors released Essentials of Impact Investing: A Guide for Small-Staffed Foundations. This post is adapted from the complimentary and actionable guide, geared to foundations with few or no staff that want to align their investments and missions. Download Essentials of Impact Investing: A Guide for Small-Staffed Foundations >>

To find potential advisors, it was most helpful to solicit referrals from peers. While some of these may not be a good fit with your size or budget, it is worth having a conversation with them as you may get new leads or learn about services you may wish to incorporate into the RFP.

It is also important to note that you may get a referral from a peer who had a good experience with a manager even though the advisor is not an SRI specialist. Depending on the premium your foundation places on SRI expertise and your own comfort level and knowledge of the SRI universe, this may be fine. In fact, in our case the advisor we selected was not an expert himself, but his firm had the resources to meet all of our fundamental needs.

Pam Fujita-Yuhas and Zoe Rothchild, NW Fund For The Environment

When it comes to making impact investments, foundations of all sizes partner with consultants and financial advisors for a variety of reasons. Three common ones are to receive support for discrete needs, such as deal sourcing or portfolio monitoring; to augment existing capacity on a longer-term basis; and to use consultants’ and advisors’ imbedded capacity to implement a complex impact investing strategy.

Finding an advisor who will best address your foundation’s need starts with drafting a well-thought-out request for proposal (RFP). Here are some best practices:

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