Kate Rogers: The best investment committees set clear long-term goals

Clarity about your expectations is vital, writes our columnist

Kate Rogers
Kate Rogers

A few weeks ago I met a couple of Olympic sailors. I was on a leadership course and they were invited to share their perspectives on high-performing teams. They spoke about the importance of setting a clear long-term goal – in their case to go to the Olympics with the best chance to win the gold medal – about how all their efforts, training and continuous feedback are designed with this in mind, and how all members of the team are striving for that goal, whether they are planning to travel to Tokyo in 2020 or not.

I’m also reminded of the story of the NASA caretaker who was asked by President Kennedy in 1962 during a visit to the space centre: "What are you doing?" "Well Mr President," responded the caretaker, "I’m helping to put a man on the moon." Successful teams set clear goals that all can feel part of, no matter what their responsibilities are.

There are many ways to translate this mindset into the charity sector. Charities arguably have an easier job than companies in expressing their aspirations and goals: I suspect that, for most, curing cancer would be more of a motivation than making a better widget. However, I want to focus on high-performing charity investment committees and how a clear goal with clarity about expectations can help trustees and investment committees function more effectively.

The best charity investment committees I work with are absolutely clear why they are investing their assets. They know the role that the assets play in their balance sheet and aspirations, whether solely financial or incorporating social outcomes. These goals are translated into measurable investment objectives and, because they are long-term investors, are often expressed over decades, if not centuries. They communicate these objectives and goals to stakeholders, beneficiaries, executives, donors and partners, including investment managers. Discussions are strategic and decisions made intentionally. Expectations are realistic and oscillations in market values are expected.

In fact, these investment committees sometimes welcome market falls, so they can buy investments at more attractive prices. Clarity about both the objective and the time horizon allows these high-performing investment committees to focus on their long-term strategies, without being distracted by the noise of short-term market fluctuations.

Of course this is easier said than done, particularly when faced with what appear significant shifts in the political and economic landscape. But even those who forecast Brexit and a Trump presidency have probably been surprised by the scale of the positive market reaction, which only goes to highlight the potential futility in forecasting short-term binary outcomes. Successful charity investors are more strategic than that. To use a sailing metaphor, high-performing charity investment committees set their strategic courses, trim their sails to optimise their capture of the wind and ride out the inevitable waves.

Kate Rogers is head of policy at Cazenove Charities

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