Beyond "Check the Box": 4 Principles for an Effective Faith-Based Investment Committee

By: Brian Seay, CFA

As stewards of your organization's mission, leading the investment committee can be a challenging responsibility. Too often, these meetings can feel like slow, frustrating, "check the box" exercises that don't seem to accomplish much.

It doesn't have to be that way.

When you build the right process and governance practices, your investment committee can be engaging, purposeful, and a powerful engine for your mission.

As fiduciary investment advisors for churches and faith-based non-profits, we've guided countless boards through this exact process. Here are four key principles to help you build a more effective and empowered investment committee.

1. Define Clear Roles and Decision-Making Authority

The most common source of frustration is confusion over who can decide what. Committees often waste an entire meeting debating this every time a decision needs to be made.

Your first step is to clearly document the answers to these questions:

• What decisions will the committee make on its own?

• When must a decision go back to the full board for a final vote?

In our experience, a best practice is to have the full board approve major policy changes (like asset allocation targets or spending policy), while the investment committee oversees everything else. This empowers the committee to handle investment strategy, performance reviews, and manager selection, making the process far more efficient.

2. Develop a Durable Investment Policy Statement (IPS)

Successful endowments and foundations all have a well-developed Investment Policy Statement (IPS). This document is the roadmap for your stewardship.

An IPS provides a clear plan that extends beyond any one person, ensuring continuity as committee members rotate on and off the board. It often includes:

• Investment goals and objectives

• Risk tolerance

• Target asset allocation

• Spending policy (how funds are distributed)

• Performance review cycles

Remember, the asset allocation documented in your policy will determine more than 90% of your investment success over time. Don't skip the single most important part of your long-term plan.

3. Separate Governance from Management

This is the most transformative principle a committee can adopt. As consultant Kenneth Dayton famously said:

"Governance is not Management."

Governing an endowment and managing it day-to-day are two different roles, just like the distinction between a board member and a CEO.

• The Committee's Role (Governance): Focus on the big picture. Connect the portfolio to the organization's strategic goals, develop the asset allocation, and review performance.

• The Investment Advisor’s Role (Management): Handle the day-to-day work. This includes rebalancing the portfolio, researching investment themes, and selecting individual funds or managers.

This day-to-day management should be outsourced to a professional investment advisor or a dedicated, experienced staff member. This frees your committee to focus on the high-level strategy where they add the most value.

4. Run Purposeful Meetings with Clear Agendas

An "investing" meeting can easily spiral into discussions about the economy, geopolitical issues, or anything else on a member's mind.

A clear meeting agenda, sent with all review materials in advance, is your best tool. This focuses the committee on the tasks at hand—governance and policy—and prevents the meeting from getting lost in the weeds of day-to-day market noise. (For more on this, see our piece on running effective investment committee meetings.)

You Don't Have to Do It Alone

These four principles can shift your committee from a frustrating obligation to an effective pillar of your organization's mission. But you don't have to implement them in a vacuum.

Partnering with a fiduciary investment advisor who specializes in faith-based organizations is the most effective way to build these best practices. We can help you draft your first Investment Policy Statement, streamline your governance, and serve as your outsourced investment manager, freeing your committee to focus on what matters most: your mission.