Anna Tabke, CFA, CAIA, served as a featured speaker at a private investment conference that brought together CFOs from nonprofit organizations to discuss best practices and learn from industry leaders. Drawing on her extensive experience leading Outsourced Chief Investment Officer (OCIO) searches for nonprofits, Anna provided valuable insights into effective investment governance. The following blog summarizes her most important takeaways.
The Portfolio’s Central Role
For private foundations, the investment portfolio isn’t just one part of the organization—it’s what makes everything else possible. As Anna put it, “You’re not out fundraising. Your pool of capital has to keep the lights on, make the organization run, and support the mission.” That reality makes investment outcomes critically important. Yet when foundations consider improving outcomes, the conversation almost always begins with strategy—asset allocation, manager selection, alternatives, and even the Yale model. These are all important considerations, but they’re not the place to start. The real driver of long-term results is governance.
What Actually Drives Outcomes
When asked what it takes to maximize investment returns, the answer is often more complicated than it needs to be—or at least, people expect it to be. “The secret? It’s governance. Governance, governance, governance.” That may sound overly simple, but in practice, it’s anything but. Governance isn’t a single decision or document—it’s the system that supports everything else. Effective governance means having:
- Clear roles and responsibilities across the board, staff, and external partners
- The right level of education to make informed decisions
- Oversight rather than micromanagement
- A structure that supports consistent decision-making over time
When these elements are in place, an investment program can function as intended. When they’re not, even strong strategies begin to break down.
Why Strategy Isn’t the Problem
It’s easy to assume that better outcomes come from better ideas—more sophisticated strategies, earlier access to opportunities, or identifying the “next big thing.” And sometimes that’s true. But more often, the challenge isn’t choosing a strategy—it’s sticking with one. Markets don’t move in straight lines, and strategies go through periods of underperformance. That’s where decision-making can start to shift: adjustments get made, risk is pulled back, or portfolios are repositioned based on recent results. Over time, those decisions can compound in the wrong direction—not because they’re irrational, but because they’re not grounded in a consistent framework.
The Yale Model—And What People Miss
The Yale endowment is often held up as the gold standard —and for good reason: its long-term results are compelling. But the takeaway isn’t just about illiquidity, alternatives, or access to top-tier managers. As Anna noted, “One secret in Yale’s success was David Swensen’s ability to engage the committee in governance, not investment management.” That distinction matters. The strength of the model wasn’t just what Yale invested in—it was how decisions were made, how aligned the committee was, and how consistently the strategy was executed over time. That’s much harder to replicate than any individual investment.
Discipline Is the Advantage
Whether a foundation leans toward a complex endowment-style portfolio or a simpler, more passive approach, the same challenge applies: maintaining conviction over time. “It’s super easy to keep these investments when everything’s going great. The challenge is knowing what to do when things are bad.” That’s where governance shows up in real terms. Strong governance provides:
- A clear investment policy
- Alignment on long-term objectives
- A shared understanding of how decisions are made
- A framework for evaluating performance
It also builds something less tangible, but equally important: trust—in the portfolio, in the process, and in the people responsible for managing both. Without that, even well-designed strategies become difficult to maintain.
What Good Governance Looks Like in Practice
At its core, governance is about fiduciary responsibility: acting with care, loyalty, and in service of the mission. In practice, that translates into key principles:
- Maintaining diversification
- Defining a clear investment policy
- Understanding and managing fees
- Bringing in the right expertise
- Consistently monitoring outcomes
Or, more simply, knowing what you’re responsible for—and what you’re not. As Anna emphasized, “You don’t have to be a good investment person to be a good investment committee member. Know what you don’t know and hire experts to fill in the gap.” That mindset is often what separates effective governance from ineffective oversight.
The Real Work of Governance
There’s no single model that works for every foundation. Some organizations build internal teams, others rely on consultants or OCIO partners, and many use a combination of both. The structure matters—but only insofar as it supports good decision-making. At the end of the day, governance is about alignment: alignment around objectives, processes, and decision-making. When that alignment is in place, investment programs become more consistent, more resilient, and better positioned to support the mission over time.
The Bottom Line
Maximizing mission through investment returns isn’t about finding a better strategy. It’s about building the governance framework that allows any strategy to succeed. Because over time, outcomes are not driven by individual decisions—they’re driven by the system behind those decisions, and by whether an organization has the discipline to follow it. The key to investment success isn’t in the choices you make, but in the governance that guides them.
At Leita, we help organizations step back and evaluate how governance, structure, and external partnerships come together to support long-term investment success. Whether building internal capabilities or selecting an OCIO partner, the goal is the same: creating a framework that enables disciplined, informed decision-making over time.
