Globally, faith based organizations (FBOs) both large and small are facing challenges unlike any other institutional entity. Guided by a higher authority, FBOs must navigate the capital markets in a manner that puts their ideals and principles ahead of potential gains, all while trying to raise funds, sustain growth, and fulfill their spending needs. Additionally, each FBO has their own unique constraints that make it difficult to work with many standard investment products and solutions.

 

A strict-adherence to socially responsible investing (SRI) remains a critical component defined by each FBO, however, SRI compliance should be balanced with reducing the risk associated with unforeseen volatility and the impact this can have on an organization's operations and planning.

Just as fundraising goals are set for a capital campaign based on spending needs for the upcoming year, the investment strategy should be designed to balance the goal of excess investment returns with overall organizational risk capacity. This asset/liability orientation seeks to reduce the probability that a market downturn will significantly impact the ability of a FBO to achieve their strategic goals.

 

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