7 Ways a Nonprofit Can Benefit from Institutional Asset Management

What is institutional asset management?

Institutional asset managers are firms who assist in managing the finances and investment portfolios of institutional clients such as nonprofits, corporate entities, endowments and foundations, public funds, healthcare organizations and insurance providers.

This type of financial service seeks to outsource specific financial tasks from these large organizations to experts with a deep understanding of the compliance and regulatory rules that apply to them.

For this reason, institutional asset management firms are often responsible for investing and managing large pools of assets to meet client goals, performing investment analysis and financial consultative services to key stakeholders, conducting research and facilitating the various goals an institutional client might have for their finances.

7 benefits of working with an institutional asset management firm as a nonprofit

The primary benefit of working with an institutional asset management firm is access to the expertise and guidance such firms provide on financial matters.

To fulfill your mission effectively, you need a strong understanding of not only your current financial situation but also a strategy for how you’ll manage your funds years or decades from now.

1. Investment management and organizing your nonprofit’s assets

Institutional asset management firms have a deep understanding of both investment markets and the unique challenges faced by nonprofit organizations.

This expertise helps them develop and implement investment strategies that align with your nonprofit’s goals and risk tolerance, helping you organize your broader portfolio while managing risk and growing your investments over time.

By entrusting your assets to professionals, you can maximize returns and ensure that your investments are managed effectively while devoting your nonprofit's resources solely to furthering your core mission and soliciting donations.

2. Securities custody and administrative services

Another key administrative benefit of working with an institutional investment management firm is that they may be able to take on any securities custody needs your nonprofit may have for your current portfolio. For example, a trust company that serves as a fiduciary and investment manager may also provide all of the safety and compliance requirements of an asset custodian.

Critical services in this sphere include asset safekeeping, trade settlement, income collection, corporate action monitoring, automated sweep investment and comprehensive reporting.

Put simply, working with financial professionals can better safeguard your financial holdings, adding an extra layer of protection around your assets by delegating custody and administrative tasks to experts with a deep understanding of your industry.

3. Escrow services and mitigating risk

Escrow is a legal concept that describes a financial agreement where a third party manages and safeguards an asset on behalf of two other parties.

For nonprofits, this means partnering with a financial institution that will hold and distribute funds relating to donations, grant disbursements, mergers and acquisitions, asset purchase transactions (real estate, equipment and machinery, etc.) and other transactions that require a third-party agent.

The primary benefit of such an arrangement is that it mitigates risk for all parties involved, enhancing your organization’s credibility and trustworthiness in the eyes of your partner while ensuring compliance and detailed asset management of your nonprofit’s funds.

4. Compliance guidance and consulting services

A deep understanding of fiduciary matters, including compliance with the Prudent Man Rule, investment and spending policies and accurate portfolio accounting and performance reporting, is critical to ensuring your nonprofit runs as smoothly as possible.

For this reason, an often-overlooked benefit of working with an institutional asset management firm is that they can provide consulting services to your board of directors, connecting your management team with subject matter experts who can provide guidance and clarity on complicated financial management issues.

5. Processing of in-kind distributions of securities

Should a donor or other organization choose to make an in-kind donation of securities such as stocks or bonds to your nonprofit, your institutional asset management firm can work with the donor’s financial advisors to facilitate and process the distribution. More specifically, the custodian of assets will play a key role in asset transfer and accurate tax reporting for the donor.

For both practical reasons and tax mitigation purposes on the part of the donor, this can be beneficial for ensuring any in-kind securities are processed quickly and safely as they are transferred between the two portfolios.

6. Support when communicating with large donors

Potential donors rely on the expertise of your investment management firm’s financial professionals to provide peace of mind that donated assets will be appropriately handled.

Specifically, institutional asset management firms can assist in creating customized investment portfolios and reports to meet the needs and requirements of major donors—enhancing donor relations and encouraging continued support.

7. Additional donor outreach support and opportunities

Finally, it’s important to remember that asset managers work with numerous other nonprofits and often have deep relationships across various aspects of the nonprofit industry.

Partnering with your institutional asset management firm’s team can often open doors to development officers in other nonprofit and endowment clients and local accounting and legal firms who can educate donors on the benefits and techniques of planned giving.

Work with an institutional asset management firm that puts your complex needs first

Nonprofits face unique challenges when it comes to asset management. They need to invest their assets wisely to generate sustainable returns while simultaneously ensuring compliance with all applicable laws and regulations.

An institutional asset management firm can provide nonprofits with the expertise and resources they need to manage these two competing considerations effectively.

At Associated Bank, we are committed to serving the investment management needs of nonprofit organizations, leveraging a long history of relationships with charitable foundations to better understand the unique aspects of nonprofit organizations and the asset management and consultative services that are so important for your success.

Our industry-leading team provides numerous asset management and consultative services to help your nonprofit better manage its finances:

• Fiduciary capacity — We are legally and ethically obligated to act in your best interest.
• Investment approach — Hallmarks of our professionally managed portfolios include high asset quality, broad diversification, an emphasis on risk management, and competitive and consistent performance.
• Customized solutions — We construct portfolios according to your unique risk profile and position them to pursue your specific return objectives and mission.
• Team approach — Avoid the risk of manager turnover or unavailability due to vacation, illness or retirement.

Learn more about the different solutions Associated Bank has available for nonprofit organizations by reaching out to us online or by finding a wealth management team near you.

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