Allocation Strategies

The nonprofit ended 2008 in a quandary. Its restricted funds had fallen below thresholds that kept the organization from accessing them. It needed compelling investment returns to draw upon its financial resources, yet significant losses could not be afforded. With markets in disarray, the organization called upon Syntrinsic.

In early 2009, Syntrinsic met almost weekly with the organization’s senior staff and investment and finance committees to better understand their financial position, budget, and business model. Through these investigational meetings, Syntrinsic helped surface critical issues that enabled volunteers and professional staff to better evaluate possible outcomes.

One thing was clear: the organization could not rely upon the traditional “endowment model.” Liquidity and transparency requirements prevented allocating to typical alternative investments. Their aversion to volatility meant a smaller allocation to risk assets than most endowments used. A material allocation to US government bonds would impair the ability to meet long-term objectives.

Syntrinsic’s research indicated significant dislocations in several fixed income sectors, as well as material opportunities within parts of the equity, commodity, and real estate markets. Syntrinsic presented nuanced allocation recommendations that reduced potential volatility while creating compelling return opportunity with high liquidity and transparency. They were accepted.

The investment committee and staff maintained the confidence of the board and key stakeholders while positioning the organization for reasonable growth. Syntrinsic had thoughtfully assessed the organization’s unique situation and had evaluated the capital markets with an objective and independent eye. The organization – and the community – benefitted.