The Intentionally Designed Endowment
Increasingly, endowments are exploring and implementing strategies for endowment portfolios that are more closely aligning with institutional mission and sustainability goals.
This Roadmap guides investors through key steps toward creating intentionally designed endowments – those that look to align investment practices with institutional mission through sustainable investing (SI), which includes explicitly considering long-term environmental, social, and governance issues in the investment process. Throughout the Roadmap you will find links to the IEN website where you will find resources for each of the steps.
There is no “one right way” to approach this process. The steps outlined here are not necessarily linear; each institution may take a different path, taking steps in a different order and at a different speed. The process should be iterative, with mechanisms for revisiting past steps and adjusting if needed as circumstances change or as the Board’s understanding of the issues deepens.
The Roadmap is to be a living document, that is updated as stakeholders provide feedback, new supporting tools and resources become available, and as circumstance change.
An overview of the roadmap is available as a PDF.
Step 1: Learn
Before exploring avenues for aligning the endowment with institutional mission, trustees will want to understand sustainable investing in the context of their fiduciary duty and of today's capital markets.
Step 2: Build Consensus
Endowment fiduciaries will want to have a common understanding of the institution's mission and to understand how that mission might be better advanced by the endowment's investments.
Step 3: Establish Investment Policy
Formalizing what it means for an institution to align its endowments with its mission into a written investment policy statement is consistent with best practice for fiduciaries.
Step 4: Assess the Current Portfolio
Once an investment policy has been established, it is helpful to assess the current portfolio in relation to those guidelines.
An institution may choose to adopt sustainable investment practices across the whole portfolio or to stage in different facets of an intentionally designed endowment.
Step 6: Monitor the Portfolio
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.
Step 7: Communicate Progress
Sharing progress publicly on sustainable investment activities can signal to alumni, donors, students and faculty that the school fully embraces its institutional mission.