Monitor Financial Performance and Portfolio Alignment

Aligning the endowment with mission is an iterative process and includes ongoing monitoring of the endowment portfolio in terms of both financial performance and alignment with mission. 

Measuring Financial Progress

  • In order to signal their focus on long-term investing, endowments will include a benchmark that matches their endowment's long term financial goals such as an Inflation plus Spending benchmark.

  • In addition to the standard broad market benchmarks, many index leaders now offer ESG and values-aligned benchmarks such as Low Carbon, Catholic Values and Women Leader indices that can be added as secondary benchmarks.  For more information on some specific benchmarks:

Measuring Progress on Endowment Alignment with Mission

Endowments can use some of the same tools that were used in the original portfolio assessment to continue to monitor progress in aligning the endowment with the institutions mission:

  • Ask consultants/OCIOs to analyze portfolio for percentage exposure to specific stocks, industries or revenue streams
  • Engage a third party provider to analyze your public equity and fixed income portfolios.  These ESG research firms provide data on company's revenue streams, history of controversies and, to some extent, positive impact across a number of E, S and G issues.  Providers include: SustainalyticsMSCI ESG Analytics HIP Impact Investor Rating and Portal and Bloomberg.
  • As You Sow, a nonprofit that promotes environmental and social corporate responsibility has created a publicly available Mutual Fund Screening Tool for fossil fuel, weapon, deforestation, and tobacco free funds.
  • Engage asset managers in discussion about their consideration of ESG factors as part of ongoing due diligence.

 

Two Comprehensive Tools for Monitoring Portfolio Impact

The Impact Management Project

 

“"Figuring out what you think your capital can likely achieve through your diversified fiduciary portfolio is the most important thing."

     - Brian Telstad, Partner, Bridges Fund Management

The Impact Management Project (IMP) aims to provide consensus on how to talk about, measure and manage impact, bridging the perspectives of 700+ investment, grantmaking, business, non-profit, social science, evaluation, wealth management, policy, standard-setting and accounting practitioners (among others).

 

The Investment Integration Project

  • Measuring Effectiveness: Roadmap to Assessing System-level and SDG Investing, examines how investors can chart a course to assess system-level issues (like those contained in the SDGs) appropriate for their 
    specific situation, and then establish effective goals for influence against which to measure progress. In doing so, investors also can assess the potential usefulness of the tools available to them and the effectiveness of the tools they have selected. Ultimately, this approach enables investors to assess their influence in determining changes at the system-level itself and the potential contribution of their efforts and investments.
    The report is authored by William Burckart, Steve Lydenberg and Jessica Ziegler of The Investment Integration Project (TIIP) and was sponsored by the Investor Responsibility Research Center Institute (IRRCi).
    A companion document to the report, Measuring Effectiveness: Roadmap to Assessing System-level and SDG Investing-Supplemental Appendices, contains a series of appendices that provide tools and examples for investors, as well as additional context for and information about the concepts discussed

 


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