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How to Further Your Organization’s Mission: Insights from the 2023 Institutional Client Symposium

Amid volatile markets, divided politics and an uncertain economic outlook, nonprofit organizations face financial responsibilities and risks that pull in many directions.
At Goldman Sachs’ 13th Institutional Client Symposium in New York, speakers offered guidance to help navigate these tensions and prosper.

Panelists discussed the importance of strong governance and a steady investment strategy in unsteady times. They talked about recent scrutiny of sustainable investment strategies as well as opportunities, and provided perspective on the road ahead for private equity. They also shared the advantages in being nimble, ready to embrace artificial intelligence (AI) tools or changes in the donor base. Speakers also described ways organizations can help build community, complementing the many stories the audience heard about the meaningful work nonprofits do every day.

“If you do well, communities do well, and we all do well,” Amal Alibair said. “The decisions you make will drive these organizations forward and help them last into perpetuity.”

Amal Alibair, Frances Spreer Albert and Ina Drew

Shaping and sharpening your organization’s investment strategy

“There are times when one should not have a huge amount of certainty,” Sharmin Mossavar-Rahmani said, sharing her team’s forecast of a 45% to 55% recession probability in 2023. Sometimes the fog is real, and the best one can do is to be reasonably thoughtful and cautious.

Financial conditions are deteriorating due to the sharp tightening of monetary policy, Sharmin said. At the same time, though, inflation is moderating and the economy shows few imbalances or excesses.

If some endowments and foundations across the country have felt less pressure to react to recent market uncertainty and volatility, it’s likely because of the work they’ve done to enhance governance and oversight. Both Sandy Lee and Gerald Crotty cited the value of prior preparation as they navigated market turbulence in 2022.

Stephanie Kenary, Sandy Lee, Gerald Crotty and Chris Blume

Early in the pandemic, Sandy said, her foundation did a deep dive to assess its financial stability. That helped last year: Board members unnerved by the rare twin decline in stocks and bonds trusted how the organization’s financial leadership responded.

“This time, they really took a moment to listen to what we had to say on the finance committee and how confident we were in our position and our ability to navigate through,” Sandy said.

Gerald advised that long before any crisis hits, you should be talking about the investment policy statement and what you're trying to achieve.

Gerald said New York Law School benefited from rigorous stress testing of its investment strategies, including an evaluation of how the endowment would fare in a 40% peak-to-trough market decline “if we didn’t raise another nickel.”

Ina Drew also stressed the importance of the investment policy statement for defining an organization’s goals, strategies and processes. In Barnard College’s case, the investment policy statement helped the school properly define and execute their fossil fuel divestment plans.

Preparation is critical when selecting investment advisory partners. Ina said when the college was seeking a new advisor, some on her board focused on the team that would handle the relationship. However, she wanted to weigh the attributes of the firm because the team handling your business can change. She emphasized the importance of learning the advisory firm’s track record, history, fees, and whether they are gaining or losing clients, to fully understand its strengths and weaknesses.

Frances Spreer Albert said her organization had grown more complex and needed more sophisticated investment advisory support. In addition to the right experience and credentials, her organization put special emphasis on alignment.

“We were looking for someone as interested in our mission and in sustaining our mission as we are,” she said.

Raising funds and pursuing growth in a volatile landscape

Not just volatile markets but also fractured politics can upset investment plans. Global geopolitical conflicts and U.S. political divisions should be watched closely for their potential to shift the outlook, several speakers cautioned. Sir Alex Younger provided his perspective on the uncertain geopolitical environment which poses a risk to institutional portfolios.

As a measure of the depth of U.S. political divisions, which could threaten damage to the economy and markets, Joe Wall cited a recent opinion poll. Americans were asked whether they see their country as a dysfunctional family that’s splitting apart or more like a tight-knit family emerging stronger from its challenges. Dysfunction beat tight-knit by 81% to 16%.

How should investors respond if war, politics or something else threatens the economy or deepens the uncertainty that prevails today? Stay the course, Sharmin said.

Sharmin Mossavar-Rahmani

“Don’t try to shift the portfolio and be too tactical because it may result in underperformance,” Sharmin advised, sharing her group’s expectation that a well-diversified portfolio should post a 9%-10% return this year.

Kristin Olson echoed this caution later in the day during a panel that highlighted areas of opportunity in private credit markets.

As with equities, it's not possible to market time with private credit investments, Kristin explained. “Have a commitment plan. Make commitments year in and year out.”

Fundraising is another frontier dramatically impacted by a changing world, including shifting demographics among donors. Individuals rather than foundations or corporations account for the largest share of annual giving, making up some two-thirds of all donations in the U.S. in 2022.* Even as the dollar total continues to rise, fewer people are giving, according to Amir Pasic. This “dollars up, donors down” trend is prompting organizations to alter their outreach strategy, he said.

“It became really clear we had to change our approach,” said Dr. Michael Horne.

With a younger and more diverse donor base, expanding health access has become the central theme of the Parkland Health Foundation’s outreach, Michael said. Fundraisers worked with the hospital’s leadership team to explore where donations could make the biggest impact.

“I think a lot of organizations make the mistake of telling a story that only connects with the heart,” Michael added. “Connecting the heart and the head is important. And so that means moving away from what I call the ‘fluff’ in proposals or pitches.”

Using fresh perspectives to your advantage

Being willing to try new approaches can be key to business success. Hamdi Ulukaya’s experience hiring refugees at Chobani demonstrates that, as does his commitment to sometimes putting community needs ahead of business requirements.

John Mallory, Gideon Maltz and Hamdi Ulukaya

Hamdi was in search of workers for his first factory near Utica, New York, and refugees in the area who were legally settled with a right to work were searching for employment. They were having a difficult time, facing hurdles such as language barriers and the lack of a driver’s license. Hiring and supporting those refugees helped Hamdi build a stronger workforce and stronger community.

Chobani expanded its refugee hiring practice to other facilities, and Hamdi founded the Tent Partnership for Refugees to bring his positive experience to other CEOs. Tent has now enlisted more than 300 large companies to carry the baton.

“The minute a refugee has a job is the minute that person is no longer a refugee,” Hamdi said. “There’s something fundamental about seeing big corporate brands commit to the support of refugees.”

Being ready for change is important for those who oversee a smart, sound and up-to-date investment strategy. One breakthrough bringing change is artificial intelligence (AI). The widespread interest in AI is warranted, said Dr. Peter Fleischut. He believes the healthcare industry could be among the biggest beneficiaries, and NewYork-Presbyterian is getting ahead of that promise by investing broadly in AI tools.

“You hear about AI a lot,” he said. “You all have seen it transform and change a majority of industries. And there’s no doubt it’s going to happen in healthcare.”

For example, he estimated his system alone has a half-a-billion-dollar opportunity for applying AI to help qualified patients to be discharged and return home more quickly.

In the investment management industry, much of the freshest thinking appears to be at the nexus of sustainability and profitability. Karina Funk said the bar has been raised when people pursue ESG strategies. She cited the debate over exclusion versus engagement as one example. Some ESG managers might avoid investing in fossil fuels, while others might invest in such companies to engage them and push them toward more sustainable businesses.

“Shoehorning a heterogenous set of managers into one category is not right,” Karina said. “To call all of us ESG just adds to the confusion.”

Abigail Pohlman, Brianna Barrett and Karina Funk

Sustainable investing decisions may sometimes seem subjective compared to the objective financial metrics involved in equity selection or debt underwriting, and there can be unintended consequences. Brianna Barrett countered, however, that her group employs quantitative impact assessments and strives to define risks and manage potential unintended consequences as part of its rigorous due diligence process.

“We’re doing impact underwriting alongside our investment underwriting. That effort is fundamental to impact investing,” Brianna said.

This article features portions of the sessions from the following speakers and moderators:

Amal Alibair, head, U.S. Institutional Client Solutions, Goldman Sachs
Brianna Barrett, managing director, Imprint, Goldman Sachs
Gerald Crotty, president, Weichert Enterprise LLC; vice chair, New York Law School Board of Trustees
Ina Drew, vice chair, Board of Trustees, Barnard College
Dr. Peter Fleischut, chief information and transformation officer, New York- Presbyterian
Karina Funk, chair of sustainable investing, Brown Advisory
Dr. Michael Horne, president and CEO, Parkland Health Foundation
Sandy Lee, president and finance committee chair, Joan Mitchell Foundation
Sharmin Mossavar-Rahmani, chief investment officer of Wealth Management, head of the Investment Strategy Group (ISG)
Kristin Olson, global head, Alternative Capital Markets, Goldman Sachs
Frances Spreer Albert, COO & CFO, Albany Med Health System
Hamdi Ulukaya, founder and CEO, Chobani, and founder, Tent Partnership for Refugees
Joe Wall, managing director, Office of Government Affairs, Goldman Sachs
Sir Alex Younger, former chief, British Secret Intelligence Service (MI6); international advisor, Goldman Sachs

Looking Ahead

If these shared stories have you thinking about new approaches for your endowment or foundation, please reach out to your Goldman Sachs contact.
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*Giving USA, 2022 Infographic

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