Non-profit organizations endowments and foundations are looking to expand their investments into global markets, seeing diversification as the best solution for dealing with current market volatility, according to an SEI poll of finance executives, directors and investment committee members.
The quick poll of 86 executives of U.S.-based firms overseeing asset pools of $25 million to $1 billion also showed that most non-profit organizations have a high U.S.-based allocation.
Almost three of four respondents allocated more assets to non-U.S. investments over the past year, and 92% said diversification is the key to protecting against volatility. Of the non-profit investment committees that increased their allocation to non-U.S. investments, 62% increased emerging markets equity; 47%, developed markets equity; 23%, global private equity; 25% global hedge funds; 27%, global fixed income; and 20%, global real estate.
Carolyn McLaurin, senior vice president of SEIs Nonprofit Management Research Panel, said in an interview that with so much inefficiency in capital markets now, money managers still are exploring global strategies in the hunt for alpha. And non-profit organizations have realized the risk of putting all their eggs in one basket, she said.
Non-profits are at the forefront of embracing global strategies as a means for an increased level of diversification and more control of the investment volatility; however, there continues to be an unfamiliarity, Ms. McLaurin said in a news release. They dont always have the resources to fully understand the global market, and were seeing a high number of prospects and clients looking for global expertise and research capabilities when it comes to these products.
A quarter of the non-profits with less than $500 million in assets said they would like to hire a chief investment officer but lack the resources. Another 13% said they do not have the resources to gain an understanding of global strategies.
Alan Secter, director of Planned Giving and Endowments for United Jewish Communities, an umbrella organization that represents hundreds of Jewish groups and communities across North America that had $15 billion in assets at the market peak, said his group is holding a members-only conference in February for non-profits to discuss global investing in a turbulent economy.
How we invest our money across the country translates into a significant impact on the amount of funds we have to grant in furtherance of our mission, he said.
Non-profits might be looking harder at global markets, but theyre not doing it with social responsibility blinders on. In the survey, many reported divesting in countries with oppressive regimes. Twenty-four percent of those polled said theyve divested from Iran and another 13% have divested from Sudan.
Ms. McLaurin said other non-profits screen out certain companies for other issue-oriented reasons such as abortion and firearms.
I think its a social sort of moral issue, and that is the catalyst for organizations not wanting to invest in those countries, she said.
To view the report, click here.