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.
1. Measure the Endowment’s 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. An intentional endowment may also choose to benchmark financial performance against an index that reflects its investment policy more closely.
In addition to the standard broad market benchmarks, many index leaders now offer ESG and mission-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:
- MSCI ESG Indices (equity)
- FTSE Russell Sustainable Investment Indices (equity)
- Bloomberg Barclays MSCI ESG Indices (fixed income)
2. Measure 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 institution’s mission on a regular interval (annual or more frequent). Review those steps and tools for measurement here.
3. Use a Comprehensive Portfolio Impact Monitoring Framework
Read IEN’s five-step guide to implementing comprehensive impact management across your portfolio here. The guide points you to resources for learning more about impact management, setting impact goals, selecting the most relevant metrics and collecting data on them, analyzing that data and reporting your findings. Or take a quick look at two examples that are gaining traction with endowments and foundations:
The Impact Management Project (IMP)
Global Endowment Management Case Study with The Impact Management Project
Read Impact Management for Complex Portfolios: A Primer for Applying the Impact Management Project Framework to a Globally Diversified, Multi-Manager Portfolio
The Investment Integration Project (TIIP)
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