Building resilience: Investment initiatives for Canadian endowments & foundations 

Investment initiatives for Canadian endowments & foundations
Investment initiatives for Canadian endowments & foundations

How can Canadian endowments & foundations (E&Fs) build resilience amidst market uncertainty, persistent inflation and increasing disbursement quotas? 

Each not-for-profit organization is unique in its mission and approach, and so should be your investment portfolio. Your investments should work to provide long-term growth while reflecting your organization’s values. However, Canadian E&Fs currently face a number of headwinds to achieving their investment objectives, including market uncertainty, persistent, systemic inflation, and an increasing disbursement quota.

Watch this video to learn more about the key investment initiatives Canadian E&Fs should focus on to position themselves for success:

We help not-for-profit organizations, such as charities and endowments and foundations, invest for change. Our independent research, advice and tailored investment solutions aim to help you deliver better investment outcomes, while pursuing your mission. Our support can be scaled to your needs, with size not being a limiting factor. Contact a Mercer consultant today to get started.

Key investment considerations for Canadian E&Fs 

The investment landscape is becoming more complex, making your strategic asset mix increasingly important. Mercer’s 2023 global E&F investment survey  – Gauging risk, building resilience reveals that the 60% Equity/40% universe bond portfolio is no longer effective. To build long term resilience, E&F investors are increasingly allocating to help diversify away from the equity risk premium.

In addition, the experience investing in private markets is overwhelmingly positive for organizations already doing so, with nearly 79%* determining that they have been adequately compensated for illiquidity risk.

* Mercer’s 2023 Global Endowment & Foundation Investment Survey

Key stakeholders, especially donors and staff, expect more from E&F organizations beyond the grants you make. Your investment program should be an extension of your values. And while E&F investors look to sustainable investment and climate transition to align portfolios with the mission of their organizations, investors’ approaches vastly differ from one another.

Climate transition is the most-cited social issue that organizations believe could be better supported through portfolio allocation. However, just 15% of organizations have set a science-based net-zero target across their portfolio while a fifth (21%) have implemented a DEI framework across their investment program.

Mercer’s 2023 Global Endowment & Foundation Investment Survey

Good governance is ‘the painting that ties the room together’ – it is our view that good governance practices can enhance returns and better manage risk over the long term.

A robust governance model can:

  • Help align liquidity decisions to long-term horizon
  • Expand portfolio diversification
  • Enable effective rebalancing

When combined, these three core components can enhance organizations’ flexibility to navigate regime changes, geopolitical events and have the potential to add up to 115 bps annually to the bottom line.*

* The return on governance, Mercer, 2023

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* 1 June 30, 2023,  2 March 31, 2024,  3 March 31, 2024,  4 March 31, 2024
The investment landscape is becoming more complex and E&F organizations need to adapt their investment program to meet increasing return targets
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