Endowments, foundations & charity investment solutions

Our investment research, advice, and solutions are customised to your organisation and positioned to help you seek better investment outcomes while you pursue your mission.
Speak to a Mercer specialist

Investing for change

We have been working with endowments, foundations and charities for more than 50 years. Our innovative investment research, advice and solutions are customised to your organisation, and positioned to help you pursue better investment outcomes.

Ensuring sustainable philanthropy

Each not-for-profit organisation is unique in its mission and approach, as should be your investment portfolio. Your investments should work to provide long-term growth while reflecting what your organisation stands for. This requires a bespoke approach to investment to help ensure that there are no nasty surprises lurking, which can either disrupt your mission or damage your organisation’s reputation.

Embracing and embedding sustainable investment principles into your investment strategy has the potential to help mitigate these risks, while ensuring that you have an eye out for the best long-term investment opportunities.

We believe a sustainable investment approach has the potential to create and preserve long-term capital, align with your organisation’s mission, and help you achieve your objectives. Download our Sustainable Investing Declaration for more about how we approach ESG investing.

Investment themes for not-for-profit organisations

There are five core considerations common across the not-for-profit sector that we believe are vital to achieving successful investment outcomes.

  • Align your portfolio with your mission

    By aligning your portfolio with your mission, you clearly demonstrate your commitment and financial support to areas important to your organisation. This involves assessing asset managers, strategies and providers to ensure they are aligned with your objectives.

  • Identify superior investment outcomes

    You may be looking to achieve higher investment returns to help realise your mission and objectives while still maintaining an acceptable level of risk. This strategy also needs to be cost-efficient to help ensure your investments can deliver even more for your mission.

  • Broad expertise and experience

    You need the right expertise at the right time to navigate complex markets. Because you can’t tackle every issue at once, identifying which areas to prioritise is paramount. Doing so instils confidence in the long-term direction of your portfolio.

  • Service standards

    When bringing in advisors and external experts, you need to make sure your portfolio is being monitored with due care. This allows you to focus your time and resources where they’re needed most.

  • Flexibility

    Your portfolio needs the ability to adapt to changing circumstances. This flexibility means you won’t be caught off guard by adverse events and remain ready to take advantage of potential opportunities.
Our independent investment research, together with our advice, and solutions are customised to your organisation and positioned to help you seek better investment outcomes, whilst also pursuing your mission.
Paul Fleming

Head of UK Endowments & Foundations

Three steps for reviewing and setting your strategy

You should carefully review your objectives and beliefs and assess whether they have changed and how they can be documented. Below are some questions to help guide your review:

  • What is your timeframe for investment?
  • What return do you need?
  • How much do you need to spend?
  • At what point does a less favourable market environment impact your ability to grow your capital?
  • What are your sustainability goals?
  • What positive impacts do you want your investments to have?
  • Who are your stakeholders and what do they need? For example, is reporting required?

Align investment strategy with your objectives and beliefs. You should consider having a broad opportunity set available across the full range of asset classes. Traditional asset classes may not deliver the same returns in the future.

Consider how your strategy helps you achieve these goals and assess options if your current strategy doesn't help you achieve them. What strategic asset allocation helps you get the sustainable return you need, allows you to spend at the rate you need and fits with your risk appetite? How can you ensure your investments make a positive impact and are sustainable?

  • Is your manager serving you well?
  • What do you want to discuss or decide at the board/committee/management team level?
  • Are there other ways to invest that may allow you more time to focus on your core mission?
  • Do you want more control over your investment decisions?
  • Is there sufficient expertise in place to make investment decisions?

Put a pro-active review process in place addressing the above points so that important changes can be implemented when needed.

Advice in action for a large UK charitable trust

It’s not surprising that our clients want to spend more time on their core activities, but investment challenges can get in the way.

One large charitable trust we worked with in the UK wanted to build a longer-term strategy, incorporating sustainability and the ability to fund its grants at the core of the trust’s mission. The trust’s investments lacked diversification and were exposed to potentially significant risk from falling asset prices.

Meanwhile, the trustee board needed to manage the operational aspects of its investments, but its in-house team lacked the resources and expertise to do so.

We worked with the trustee board to develop a clear strategy supporting a sustainable level of grants each year while also seeking to retain the real value of trust assets over the long-term. Together, we implemented a robust, diversified sustainable investment strategy, in- line with the trust’s mission, while helping to reduce risk and position the trust to access potential opportunities.

The strategy was implemented using Mercer’s Investment Solutions platform, which provides access to a wide range of asset classes, including private markets. The new portfolio provided exposure, in a cost-effective manner, to more than 20 asset managers with investment strategies rated highly by Mercer.

Key benefits for the client:

  • Improved governance structure

  • Asset managers and strategies

  • Integration of ESG considerations

  • Reduce investment risks

  • Improved overall returns

Common questions from endowment, foundation and charity investors

When choosing an investment firm, look for someone that has global reach, access to highly rated managers and the potential to drive down fees through economies of scale. You should also consider whether the investment provider receives any commissions from fund managers that could eat into your gains.

The appointment of an outsourced CIO (OCIO), also known as a fiduciary manager, entails the full or partial outsourcing of your organisation’s investment function to a specialist third party provider. Typically, this will make most sense when you have resource-constraints and wish to focus on other things. When delegating certain investment tasks to a third party, you will typically retain some level of fiduciary responsibility and maintain control over strategic asset allocation decisions.

When providing its services, the OCIO should look to understand your organisation and its needs, and have the implementation expertise to execute your strategy quickly, efficiently and in a risk-controlled manner. This is usually done through the pooling of assets, and so enable you to enjoy the benefits of economies of scale through lower fees as well as access to high quality managers.

Private markets such as infrastructure, private equity, private debt and real estate can all offer you important sources of potential returns and income that are less correlated with public equity and bond markets. However, accessing these opportunities is not easy. When looking for an investment partner, look for someone with scale, experience, and strong relationships with high quality managers around the world which means they may be well-placed to assist you with building an alternative investment portfolio.

Although it’s extremely difficult to predict where the next economic shock will come from, it’s important that your portfolio is designed to react to market changes - including being adequately diversified across asset classes and managers. Achieving the right level of diversification requires expertise.

Our research and strategy team of more than 200 dedicated professionals1 constantly monitors our rated fund managers and global financial markets to help you navigate the investment world.

We have been helping clients across the globe integrate ESG2 considerations within their portfolios since 2004. This includes integration, stewardship, thematic investment and screening. We can help you construct a portfolio and strategy to support your organisation’s wider goals.

From an organisational perspective, we seek to embed sustainability across our advice and implementation work. We are a signatory to the United Nations’ Principles for Responsible Investment, and our Sustainable Investment Policy are freely available for you to access to understand more about how we operate in this field.

A commitment to diversity and inclusion is part of our social responsibility as a global company. Diversity is one of our core values and our work in this area centres on a commitment to employees, our clients, and the communities in which we operate.

Our manager research team embeds cognitive diversity into every strategy that they research. However, asset owners have different criteria around identity diversity and we work with them to identify what is most important to them when selecting managers, so they are well placed to help your organisation address this important global issue.

Read more about our investment services

Our global team of investment professionals is ready to help you explore the full potential of your investment portfolio and achieve your organisation’s mission. Here are just a few insights into what we can offer.

  • Fiduciary management /OCIO

    For 15 years, Mercer has provided fiduciary management services to a range of institutional investors – from pension schemes to endowments, foundations, insurers and wealth managers. Our flexibility, global intellectual capital and manager research help us to deliver for clients.

  • Investment consulting

    Mercer Investment Consulting is a leader in the UK market. Our investment consultants are equipped with extensive and in-depth global research, intellectual capital and specialist solutions.

  • Sustainable investment

    Drawing on two decades of experience, we offer research, advice, tools and solutions to help you wherever you are on your sustainable investing journey.

  • Alternative investments

    Leveraging our existing relationships with hundreds of asset managers around the world, we can help you identify and source new investment strategies, opportunities, ideas and innovations across private markets and hedge funds.

  • Strategic and asset manager research

    Become a member of the MercerInsight® Community today to get access to strategic research from hundreds of thought leaders around the world, including Mercer and third-party publishers. It’s complimentary and easy to join.

  • Managing investment risk

    Our Mercer Sentinel team can help you conduct due diligence and mitigate operational risks across your portfolios and strategies. We assess asset managers, custodians and other service providers to help you deliver on your governance objectives.

Leverage our breadth and depth

$16.2T

US $16.2 trillion in global assets under advisement1

$548Bn

US $548 billion in global assets under management2

11K+

More than 11,900 investment strategies rated3

3K+

More than 3,000 asset managers rated4

* 1 June 30, 2023,  2 September 30, 2024,  3 March 31, 2024,  4 March 31, 2024

Our latest insights on endowments, foundations & charity investments

    Meet the team

      Talk to us

      Get in touch to learn more about our endowments, foundations & charity investments solutions.

      See our Important Notices

      1. As of 30 June 2022
      2. ESG investing refers to environmental, social, and governance considerations that may have a material impact on financial performance, and therefore are taken into account, alongside other economic and financial metrics, in assessing the risk and return potential of an investment. Thematic investing involves investing with a goal, at least in part, to achieve an impact on an environmental, social, or governance issue, alongside generating return and mitigating risk. As always, the decision whether to invest in ESG-themed options, like all options, must be made pursuant to a prudent process with the objective of advancing the financial interest of the plan and its 
      3. Fee savings cannot be guaranteed.