Overview
The investment demands of each charity are different
Northwestern Credit Financial has partnered with top-tier charity and philanthropic consultation entities to offer clients access to experts who aim to develop a strong understanding of a charitable trust's long-term objectives and requirements prior to proposing investment strategies to meet them. They then work to develop long-term solutions based on expected returns, time horizons, and levels of risk with which the trustees feel comfortable.
Charity Portfolio Management
The portfolio management services they have designed for charities feature tailored investment portfolios with either direct investments or best-of-breed pooled funds, ongoing support from dedicated charity portfolio management specialists, bespoke quarterly investment reports and valuations, attendance at trustee meetings, and safe custody and access to cash management products.
Many charitable trusts choose to use pooled funds for the management of their assets. This enables charity management specialists to structure an administratively efficient and cost-effective investment mandate with full adaptability as circumstances change. A few charities have investment restrictions that rule out the use of pooled vehicles. If a charity with this type of investment restriction holds sufficient assets to diversify the trustees' risk in a cost-effective way, our independent specialists can invest for those charities on a segregated basis.
Within this framework, our independent experts advise charitable trusts by:
Reviewing the charity's financial position, objectives, and risk appetite as reflected in the charity's written investment policy
Recommending appropriate allocations between core and strategic assets
Allocating assets tactically and selecting investments in view of relevant business cycles
Monitoring and reporting results, including measuring results against any changes in the charity's financial circumstances
This portfolio management advice provides a tailored investment solution capable of meeting a broad range of objectives, including those looking to protect against inflation, generate income, or adhere to specific ethical requirements. It aims to identify the appropriate long-term mix of asset classes that best achieves a charity's particular investment objectives in view of return objectives, income requirements, inflation protection, risk tolerance, time horizon, liquidity requirements, and ethical policy.
Cash Management and Administrative
The independent charity experts in our network of affiliated third-party professionals understand that charitable trusts have differing and complex needs and that many hold large sums in cash from time to time. Their cash administration expertise helps them to get the best possible rates combined with the highest levels of security.
Those professionals tailor their services to each charity's individual needs to provide enhanced cash returns and credit quality. They actively manage cash portfolios, each of which is individually constructed to account for a charitable trust's investment time horizon, income requirements, and appetite for risk. They seek to identify highly competitive deposit rates and offer a diverse range of products, varying from instant access and notice accounts to fixed-rate deposits. They retain the ability to invest in liquidity funds and short-dated government and corporate bonds where required.
Sustainability Initiatives
Northwestern Credit Financial has formed alliances with charitable trust financial experts who subscribe to the premise that those companies have the ability to enhance their long-term performance through an understanding of the environmental, social, and governance (ESG) issues affecting their business. They utilize specialist research to help develop investment universes that reflect a charitable trust's ESG values. Typically, these would exclude companies that do not meet defined moral criteria. For example, companies that market tobacco or alcohol to low-income populations. The experts in our alliance network also develop screens for charitable trust clients that reflect a company's material exposure to a particular issue or that focus on breaches of international standards.
As owners, shareholders have certain rights and powers, including the right to vote and the ability to engage with the companies in which they hold shares. The goal of sustainability initiatives within the universe of charitable trust wealth management is to use those rights and powers to create changes that meet the charitable trust's purpose. A charitable trust aims to be a responsible owner, seeking enhanced returns and lower risk in respect of the companies in which the charity's funds are invested. Accordingly, the charity exercises voting powers and actively engages with companies on strategy, risk, performance, and governance.
It is central to the charitable trust investment process to consider each company's ability to create and sustain value. This process further requires a charity to question and challenge companies about issues that may affect the value of the charitable trust's portfolio. Engagement and active voting shares that are held by a charitable trust are integral to the investment process.
The combination of numerous factors such as globalization, changing political landscapes, ecosystem depletion, urbanization, resource utilization, demographics, climatic patterns, employee attitudes, and consumer preferences creates challenging and changing markets in which companies operate. The assessment of how a company and its management generate long-term value through adapting to these changes and capturing the opportunities is enhanced through the analysis of corporate ESG disclosure and performance.
These elements create an increasing need for fund managers who serve charitable trusts to explicitly demonstrate how these issues are integrated into the stock valuation and selection process. The experts in our network have identified ways in which ESG data can be integrated into that process:
As a proxy for the quality of management
As a financial metric within valuation models
As an input into a thematic fund
They regard stewardship as integral to the investment process. Good stewardship is important to understanding the sustainable value of the companies in which a charitable trust holds equity.
