Australian religious organizations, charities consider outsourcing investments | Fund managers

More religious institutions and charities are seeking investment advice in Australia, creating new opportunities for financial advisors and consultants.

“We are seeing an increasing demand for investment advice for institutional investors. “People now have access to it,” said Michael Maher, JANA’s senior consultant and director of non-profit organizations (NFP). Asian investors.

The Australian investment consultancy recently expanded its client base by hiring United Financial Services (UFS), the not-for-profit arm of the financial services arm of the United Church of New South Wales and the Australian Capital Territory. did.

michael maher
JANA Investment Advisor

JANA will provide UFS with advisory services including strategic advice, manager research, and portfolio construction advice.

With the addition of UFS, the investment consultant advises more than 35 nonprofit organizations, including foundations, endowments, and government clients, and has welcomed four nonprofit clients in the past 12 months alone.

“Demand for advice may be linked to growth in the philanthropy sector. Despite the challenges of the pandemic, the Australian Charities and Not-for-Profits Commission found that last year the sector saw donations and assets fall by just under 10%. They reported an increase,” Maher said.

He also said the NFP sector remains a major employer in the economy, covering about 10.5% of the workforce.

“Given the federal government’s goal to double philanthropy by 2030, we expect this growth to continue.”

mission with a mission

Within charities like UFS, Maher said, many investors are starting to ask themselves if there is a way to make money that is more in line with, or at least doesn’t conflict with, their overarching mission. I observed that there was.

“Investors don’t necessarily think about investing through a two-dimensional framework of risk and return. “Increasingly, we are helping to shape the corpus in a way that balances the elements that are important to us,” he said.

What is clear is that there is no single approach that will work for all or most organizations, Maher said.

“The first thing we try to understand is the mission of the organization, specifically what positive change the organization is trying to make. Second, we invest capital in specific types of investments. We seek to understand whether the decision to assign a

Improved sophistication

Charitable investments are also becoming increasingly sophisticated.

“Many charities understand the importance of financial buffers and investment income. There is no doubt that the growth of the sector and its focus on investment has increased the need for increased oversight and sophistication of fund management. No,” he said.

Over the past decade, there has also been a general trend towards the democratization of financial services, giving charities access to financial services and best practice approaches that were previously inaccessible.

Maher said he hopes more nonprofits will increase their use of illiquid assets and build sophisticated portfolios through private equity, private debt, real estate and infrastructure.

trade off

According to Maher, financial performance and social value are not mutually exclusive, but there are always trade-offs. However, it may not seem obvious what that tradeoff is.

“This is because in the charity sector, each organization interprets and evaluates ‘trade-offs’ differently.”

For many organizations, not compromising their values ​​or aligning their investments with their values ​​through approaches such as impact investing generally means being more willing to invest in private markets where the greatest impact opportunities exist. means.

“Impact investing can present new challenges for organizations with no or minimal illiquidity exposure,” Maher said.

However, the premise of “endowment investing” is a willingness to take on illiquidity risk for long-term benefits and the ability to generate a long-term sustainable income stream to meet current needs while preserving purchasing power. It is based on developing spending policies that can. For future generations, he explained.

“Currently, there are several trends that allow investors to better utilize the classic giving approach, equip them to generate sustainable revenue streams, and better align their investments with their mission.” It may be possible.”