Is your nonprofit getting ready to do an endowment advisor search? Here are three actions your nonprofits should take before you speak to an external advisor.
Is your nonprofit getting ready to do an endowment advisor search? Here are three actions your nonprofit should take before you speak to an external endowment investment advisor.
Before we discuss preparation, I have a question. Have you ever been in a board meeting, ready to make a final decision? Your nonprofit board of directors is ready to take a final vote on hiring somebody, hiring a vendor hiring or making a big decision. A board member raises a last minute objection saying: “I just didn’t like the way they dressed when they presented” or “they were too slick” or “I don’t know about them”.
Suddenly, the decision is torpedoed. Your nonprofit board has to either move the decision process to the next board meeting or, worse, you have to start all over again.
“I just didn’t like the way they dressed when they presented.” or “they were too slick.”
— Nonprofit Board Member
Oftentimes, we find this happens when the decision criteria is not developed upfront for making the decision.
Here are three actions we recommend that you take before you begin this endowment search process:
- Appoint Search Committee: Your nonprofit board should appoint a search committee of no more than four to five people. Usually, it is one staff member and three to four board members, depending on size of your organization and your board. With more than five committee members, the decision making process becomes too unwieldy, even for that small committee. Any fewer than give and you don’t have the diversity of thought and experience coming into the committee.
- Document Search Process: The second action you should take is bring that committee together and document the process you will follow for this search. How long should this process take? How many prospective candidates will you speak with during the process? Will you send out a full Request for Proposal (RFP) or a smaller Request for Information (RFI)?Get your committee together, document it. Then, move on to step three.
- Selection / Decision Criteria: Agree upon the decision criteria. What criteria will you use to evaluate these endowment advisors? We recommend no more than five. Otherwise again, it becomes too unwieldy.
The criteria can be anything from: Do we want a local firm to represent our community? Or, does our nonprofit board want a brand name organization or advisor to work with our endowment. Maybe it’s important that you look at price, maybe it’s investment philosophy. Regardless. It’s important that you come up with a criteria and you document it.
“Do we want a local firm to represent our community?”
— Nonprofit Endowment Committee Member
Those are the three actions we recommend that you take before you begin your endowment advisor search.
For more information on the endowment advisor selection process, you can read our more in-depth article here.
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