Mark_Hager
Forum Replies Created
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Hire professionals? This has at least got to be in the discussion.
I like to manage investment of my own household money. I think I do okay, and I resist all the marketing calls to hire somebody to do it for me. My father-in-law, who has a lot more money than I ever will, DOES hire people to manage his household money. Could I do substantially better if I hired somebody to invest and manage my money? Maybe. Probably. But I’m cheap.
A couple examples make me think nonprofits also can benefit from hiring money people to invest their money (if they’re not cheap).
I’m amid a contract to do some research for the Council on Foundations. One project is to study compensation in grantmaking foundations. I found more than 50 people with salaries over $1 million. More than half of those people have the word “investment” in their job title. The highest several salaries are investment officers. In many cases, investment officers out-earn the foundation president. The nonprofit sector’s money (private foundation corpuses) hires professionals to manage its growth.
The other example is Harvard. That famous $53+ billion endowment throws off $2+ billion each year to fund one-third of Harvard’s operations. They have an office called the Harvard Management Company that’s staffed by serious money people who work daily to maximize the endowment’s value.
I manage my own household money because “it’s not rocket science.” On the other hand, rocket scientists have a lot better chance of getting to the moon than I do.
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Bob: Can you share more about your particular nonprofit? I’m curious how much what you DO (your services or programs) determines which mix of revenue sources you can or want to pursue.
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That’s helpful, thanks. Right, I’d always support keeping emergency reserves in something very liquid and safe. And with the fed rate hikes, some basic accounts are paying upwards of 4% now. But for an investment corpus, I’m on the side of letting the historical returns of the market (hopefully) work in our favor.
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I think this is a big point. Nonprofits that are willing to make standard investment risks (along the lines that people typically do with their retirement savings) make good returns over time. Nonprofits unwilling to invest more aggressively are stuck around 1% and won’t keep up with inflation.
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Wade: I’d love to hear more about this. Being responsible with money is laudable, but sticking it in a mattress isn’t good stewardship. You’ve found boards really reluctant to invest?