Canada’s Charities Deserve Better: A Call for Improved Fiduciary Oversight

Canada’s charitable sector plays a crucial role in the fabric of our society, from food banks and shelters to hospitals and universities. Despite their essential contributions, many charities could enhance their financial management, particularly in terms of fiduciary oversight of their investments. Ensuring proper management of these funds is not just a matter of good practice but a critical component of sustaining and growing charitable missions.

The Importance of Fiduciary Oversight

Proper fiduciary oversight is essential for the health and sustainability of any charity. When charities neglect their investments, they not only risk underperformance but also expose themselves to unnecessary risks. Fiduciaries, typically board members or trustees, must act in the best interests of their organizations. This includes making informed decisions about investment strategies to avoid leaving money on the table—money that could otherwise support their mission.

Investment Management Structures

Charities typically adopt one of three investment management structures: Do-It-Yourself (DIY), Volunteer, or Professional. Each approach has its advantages and disadvantages, and the best choice often depends on the size of the charity’s investment portfolio and the expertise available within the organization.

Do-It-Yourself (DIY)

    • Suitable for small charities with investment portfolios under $100,000.
    • Funds are often placed in conservative vehicles like Money Market Funds or T-bills.
    • Minimal risk but also limited growth potential.

Volunteer Model

    • Common among medium-sized charities.
    • Relies on an investment committee of volunteers, often including industry experts.
    • Regular meetings to review performance and make investment decisions.
    • Effective but can lack the depth of expertise found in professional management.

Professional Model

    • Ideal for larger charities or those with complex investment needs.
    • May involve hiring an Investment Consultant or Outsourced Chief Investment Officer (OCIO).
    • Provides comprehensive management, strategic oversight, and risk mitigation.
    • Frees up charity staff to focus on mission-critical activities while ensuring professional investment management.

Case for Professional Oversight

The challenge, especially for small to medium-size charities, is they lack the in-house expertise.   They should seek support from managers and firms that truly understand the unique needs of charities and their boards.

At Beacon Endowment Solutions, we are committed to helping charities navigate these decisions with confidence and expertise.   We have created a unique and comprehensive investment solution designed exclusively for charities.

Conclusion

Charities must prioritize the fiduciary oversight of their investments to safeguard their financial health and further their missions. By selecting the appropriate investment management structure and possibly leveraging professional expertise, charities can optimize their investment strategies, ensuring they make the most of every dollar raised. At Beacon Endowment Solutions, we are committed to helping charities navigate these decisions with confidence and expertise.

How does your organization manage its investments? Share your experiences and thoughts in the comments below! To learn more about how Beacon Endowment Solutions can support your charity’s investment management, visit our website www.beaconendowmentsolutions.ca.

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