Nonprofit Investing Survey Results

Thrive. Grow. Achieve.
The Study on
Nonprofit Investing
(SONI)
Survey Results
Dennis Gogarty, CFP®, AIF®
Chase Deters, CFP®, ChFC®
Mark Murphy, CFA
Copyright Raffa Wealth Management, LLC All Rights Reserved

2nd Annual 2014 SONI Survey Results/ Page
DISCLAIMER
2
This presentation summarizes the results of an
informal, non-scientific study compiled by analyzing
the results of 261 surveys completed by nonprofit
finance executives.
This presentation is for information purposes only.
Participant responses have not been verified. Data
analysis was performed by Raffa Wealth
Management.
When stating “nonprofit” responses it should be
noted that all responses are limited to the nonprofits
that participated in the survey. No broader
indications should be assumed.

STUDY ON NONPROFIT INVESTING
3
Nonprofits plan every fiscal move with great caution, backed
up with thorough analysis. Yet when it comes time to plan
their investment policies and gauge their investment
performance, they operate in a vacuum, without access to
information about how similar organizations manage their
reserves and perform on their investments.
The Study on Nonprofit Investing (SONI) is providing senior
nonprofit finance executives with peer benchmarking data on
investment policies and ROI. Raffa Wealth Management,
LLC (RWM) has commissioned this annual study to help all
nonprofits strengthen investment policies, gauge investment
performance, and ultimately provide them with the tools they
need to better serve their communities.

INTRODUCTION
4
In February of this year 261 nonprofit finance executives
completed a survey about their organization’s investment
policies and results.
The survey was developed and distributed with the help of a
third-party research provider (Visionary Marketing). Raffa
Wealth Management has analyzed the results of the survey and
is preparing the full SONI report for review.
*Other Includes: Educational, Religious, Cultural, & Community Development
Budget Of: Association Public Charity
Private/Community
Foundation Other Overall
$0-5M 44 41 16 30 131
$5-25M 56 27 2 17 102
$25+M 10 9 1 8 28
Total 110 77 19 55 261
Second
Annual
Study On
Nonprofit
Investing
(SONI)

AGENDA
5
Second
Annual
Study On
Nonprofit
Investing
(SONI)
• Budget and Reserve Balances
• Portfolio Investment Policy Review
• Portfolio Results & Analysis
• Key Takeaways and Custom Reports

BUDGETS AND RESERVE BALANCES
6
How does
the budget
size and
type of
nonprofit
impact
where
cash
assets are
held?
What percentage of a nonprofit’s reserves is held in cash?
• For most nonprofits, the relative size of their
operating cash reserves tend to decrease as their
operating budget increases.
What percentage of a nonprofit’s reserves are held in a long term portfolio?
• Once operational cash reserves are funded, most
nonprofits focus the majority of their investable
assets in long term investment portfolios
Private/Community
$0-5M 22.2% 32.8% 23.7% 39.4% 29.8%
$5-25M 18.4% 16.7% 51.4% 21.0% 18.9%
$25+M 8.5% 22.1% 4.9% 11.4% 13.7%
Private/Community
$0-5M 46.7% 28.2% 44.7% 21.4% 34.5%
$5-25M 49.0% 59.8% 10.0% 42.5% 50.5%
$25+M 53.7% 57.6% 94.1% 50.6% 55.5%

7
What is the
average
level of
investable
assets with
respect to
budget
size?
What is the minimum target for reserves?
• Most of nonprofits participating in the survey target 4-6
months for their minimum level of reserves.
• Most of nonprofits participating in the survey held more
in reserves than their minimum target.
Associations Public Charity Other
45.5% 36.6% 37.5%
23.4% 31.7% 41.7%
22.1% 24.4% 12.5%
9.1% 4.9% 8.3%
Operational Budget in Reserve
4 - 6 Months in Reserve
More than 1yr in Reserve

8
How many
nonprofits
maintain a
line of
credit for
operational
shortfalls?
How many nonprofits use a line of credit?
• Overall, 14.5% of the nonprofits who responded to
the survey said they utilized a line of credit
• Of those, the average interest rate on the line of credit
was 3.4%, with a high of 7.0% and a low of 1.0%
• Most nonprofits use their line of credit to pay
expenses due to the timing of cash flows
• Those nonprofits who used a line of credit, tended to
maintain lower cash reserves (21.2% of total reserves)
than those who did not (24.7%)
Private/Community
$0-5M 7.0% 14.6% 16.7% 19.4% 13.8%
$5-25M 12.7% 7.4% 0.0% 23.5% 13.1%
$25+M 10.0% 33.3% 0.0% 12.5% 29.4%

9
Did more
nonprofits
add to, or
withdrawal
from their
investment
reserves
during
2013?
What percent of nonprofits had cash flows to/from their investment reserves?
• Close to half added to reserves in 2013
• Few nonprofit organizations needed to withdraw
money from their reserves
What percent of nonprofits have formal goals to contribute to their reserves?
• Most nonprofits only contributed to their reserves on
an ad hoc basis, with no formal guideline
Association Public Charity
Private/Community
Added 47.4% 34.9% 43.8% 31.8% 40.5%
Withdrew 10.3% 22.2% 18.8% 4.5% 13.2%
No Change 42.3% 42.9% 37.5% 63.6% 46.4%
Private/Community
Guideline 34.5% 22.1% 36.8% 18.2% 27.6%
Ad-Hoc 46.4% 51.9% 36.8% 56.4% 49.4%

AGENDA
10
Second
Annual
Study On
Nonprofit
Investing
(SONI)

PORTFOLIO INVESTMENT POLICY
11
How many
nonprofits
maintain a
formal
investment
policy and
who is
given
authority
over
investment
decisions?
What is the percentage of nonprofits with Investment Policy Statements?
• The majority (~75%) of nonprofits maintain formal
Investment Policy Statements to govern their reserves
Who maintains decision-making authority over the investments in the portfolio?
• Most nonprofits (53%) give their investment advisor
discretionary authority to make investment changes within
the guidelines of the IPS
Private/Community
90 51 12 30 183
88.2% 67.1% 70.6% 62.5% 75.3%
Private/Community
60.0% 51.0% 58.3% 36.7% 53.6%
38.9% 39.2% 25.0% 40.0% 38.3%
1.1% 9.8% 16.7% 23.3% 8.2%
Discretionary
Non-Discretionary
Don't Know
Inv Adv Authority

12
What
nonprofits
maintain
target asset
allocations
and who
made
changes?
How many organizations had formal asset allocation targets?
• The majority of associations have formal asset
allocation targets, but barely half of the other nonprofit
groups maintain these targets
How many organizations changed their asset allocation targets?
• Nearly 30% (23/79) of those Associations with formal
asset allocation targets chose to make adjustments to
their policy last year
Private/Community
Count 79 41 10 20 150
Percentage 71.8% 53.2% 52.6% 36.4% 57.5%
Private/Community
23 17 3 7 50
21.7% 11.8% 33.3% 28.6% 20.0%
39.1% 23.5% 33.3% 28.6% 32.0%
26.1% 29.4% 28.6% 26.0%
8.7% 17.6% 14.3% 12.0%
8.7% 33.3% 6.0%
Made a Change
More Conservative
More Aggressive
New Category
Increased Alts
Decreased Alts

13
How does
the reserve
size of a
nonprofit
impact the
target asset
allocation
of their
long term
reserve?
How do nonprofits with a $0-5M reserve structure their Long Term portfolio?
How do nonprofits with a $5-25M reserve structure their Long Term portfolio?
How do nonprofits with a $25+M reserve structure their Long Term portfolio?
Private/Community
21 12 3 7 43
14.5% 20.0% 41.7% 19.6% 18.8%
33.0% 23.7% 9.3% 35.4% 29.1%
38.6% 37.4% 16.3% 33.6% 35.9%
5.9% 12.9% 9.0% 6.4% 8.2%
3.2% 6.0% 11.7% 0.7% 4.2%
International
Alternatives
Reseve of $0-5M
# of LT Reserves
Cash
Bond
US Equity
Private/Community
48 18 2 10 78
6.9% 4.0% 5.0% 4.5% 5.9%
35.6% 34.4% 10.0% 36.5% 34.8%
38.5% 38.6% 32.5% 41.0% 38.7%
9.2% 12.9% 52.5% 7.0% 10.9%
5.1% 4.0% 0.0% 1.0% 4.2%
Reserve of $5-25M
# of LT Reserves
Cash
Bond
US Equity
International
Alternatives
Private/Community
9 11 5 2 27
1.6% 2.3% 2.8% 0.0% 1.9%
31.9% 24.4% 21.2% 25.0% 25.4%
38.9% 32.6% 28.0% 60.0% 34.6%
15.9% 16.7% 10.2% 7.5% 14.0%
11.7% 20.3% 16.0% 7.5% 15.1%
Reserve of $25+M
# of LT Reserves
Cash
Bond
US Equity
International
Alternatives

14
How does
the reserve
size of a
nonprofit
impact the
target asset
allocation
of their
long term
reserve?
How do Associations structure their Long Term portfolio?
• Smaller associations maintain a more conservative
portfolio
• Larger associations have a greater allocation to
alternatives
Cash/Bond US/Intl Equity Alternatives
47.5% 44.5% 3.2%
42.5% 47.7% 5.1%
33.4% 54.9% 11.7%
Associations
Reserve of $0-5M
Reserve of $5-25M
Reserve of $25M+

15
What
nonprofits
included
allocations
to
alternatives
in their
target
allocations?
How many organizations held alternative investments?
• 45% of organizations with a target asset allocation
held alternative investments
• Associations were the least likely to include
alternative investments in their target allocation
• Those with larger reserves were more likely to
include allocations to alternatives
Reserve Of: Association Public Charity
Private/Community
# Responses 78 41 10 20 149
$0-5M 19.0% 50.0% 33.3% 14.3% 30.2%
$5-25M 47.9% 44.4% 0.0% 10.0% 41.0%
$25+M 77.8% 100.0% 80.0% 33.3% 82.1%
Overall 43.6% 61.0% 60.0% 15.0% 45.6%

16
What kind
of
alternative
investments
are being
used?
What kind of alternative investments did organizations use?
• Real Estate most commonly held alternative
• Allocations to Private Equity/Venture Capital and
Hedge Funds increase with Long Term Reserve size
• Commodities and Precious metal holdings decrease
as portfolio size increases
• Given the 2013 return for Commodities, Hedge
funds, precious metals, and REIT’s. Holding
alternatives did not likely add value in 2013.
Reserve Of: Commodity Hedge Fund
Private Equity /
Venture Capital
Precious
Metals Real Estate
$0-5M 69.2% 15.4% 7.7% 30.8% 84.6%
$5-25M 18.8% 12.5% 3.1% 12.5% 43.8%
$25+M 8.7% 47.8% 30.4% 4.3% 26.1%
Overall 42.6% 45.6% 23.5% 19.1% 69.1%

17
Who’s
responsible
for ensuring
that the
investments
comply with
the IPS?
Who has the responsibility to review compliance with the IPS?
• Finance Committees are the most likely to have
responsibility to review that the reserves are in
compliance with the investment policy
• Associations give responsibility to internal staff
members to ensure compliance with their policy,
more so than any other organization type
Private/Community
33.0% 14.3% 8.3% 3.4% 20.9%
6.8% 12.2% 8.3% 31.0% 12.4%
54.5% 69.4% 75.0% 62.1% 61.6%
5.7% 4.1% 8.3% 3.4% 5.1%
IPS Reviewer
Staff Member(s)
Board of Directors
Finance Comm.
Investment Advisor

18
How often
should
your IPS
be
reviewed?
How frequently is the Investment Policy Statement reviewed?
• IPS is most commonly reviewed on an annual basis
(60%-77%)
• Reviewing on an as needed basis is the second most
common response (10% - 20%)
Private/Community
14.6% 23.5% 8.3% 17.2% 17.1%
77.5% 62.7% 75.0% 58.6% 70.2%
7.9% 11.8% 8.3% 24.1% 11.6%
2.0% 8.3% 1.1%
IPS Review Date
As Needed
Within 1 Yr
I don't know
2 Yrs or Less Often

19
What do
nonprofits
include in
their
investment
policy
statements?
In the IPS, what topics are addressed most frequently?
• Additional Suggestions for IPS Categories
– Performance Benchmarks - Conflict of Interest
– Definition of Risk - Spending Policy
– Cost of Funds/Management - Portfolio Goals & Objectives
– Performance Accountability - Fiduciary Status
• Permitted and prohibited investments, and the target investment
allocations were the top three items addressed
• Fewer than half of policies address selection/termination guidelines of
investment advisors
• Very few policies included SRI restrictions
Percentage
87.7%
78.2%
68.2%
61.5%
60.9%
54.7%
49.2%
28.5%
21.2%
Target Allocation Percentages
Permitted Investments
Prohibited Investments
Socially Responsible Mandate
Diversification Requirements
Items Reviewed in Investment Policy
Selection of Investment Advisors
Termination of Investment Advisors
Financial Advisor Discretion
Internal Staff Roles/Responsibilties

AGENDA
20
Second
Annual
Study On
Nonprofit
Investing
(SONI)

PORTFOLIO RESULTS & ANALYSIS
21
How does
the
reserve
size of a
nonprofit
impact
their
bottom
line
results?
What was the reported performance of the long term reserve in 2013?
• Associations with a smaller portfolio balance tended to
have a lower rate of return, likely due to their more
conservative asset allocation.
• As Public Charities grow in size, they tend to reallocate
more of their cash to alternative investments. This did
not provide a significant improvement in their
investment returns in 2013.
Reserve Of: Association Public Charity
Private/Community
$0-5M 7.9% 8.6% 11.7% 10.5% 8.7%
$5-25M 13.4% 12.4% 10.0% 13.4% 13.1%
$25+M 14.9% 12.0% 12.1% 12.0% 12.9%
Overall 11.8% 10.8% 11.5% 12.0%

Total United States Stock Market
Russell 1000
Index: top 1000
largest US publicly
traded companies
Russell 2000
Index: remaining
2000 mid-sized
and small US
publicly traded
companies
S&P 500: top 500 largest US
publicly traded companies
Value Stocks Growth Stocks
Russell 3000
Index: materially
all publicly traded
US companies
Russell
1000
Index:
Russell
2000
Index:
For Illustration purposes only. Indices are not available for direct investment and performance does not
reflect expenses of an actual portfolio. Past performance is not a guarantee of future results.

Total International Stock Market
Large International
Developed
Country Stocks
Stocks from
Emerging Market
Countries
MSCI All World
ExUS Index
MSCI
EAFE
Index
MSCI
Emerging
Markets
Index
Other: South America & Canada

Total US Bond Market
BarCap 1-5yr
Gov/Credit Index:
Avg Duration ~ 2.7yrs
BarCap Long Term
Gov/Credit Index:
BarCap
Aggregate Bond
Market Index:
Avg Duration ~
5yrs
BarCap
1-5yr
Gov/Credit
Index: Avg ~
2.7yrs
BarCap
Long Term
Gov/Credit
Index:
Avg ~
14.2yrs
BarCap 5-10yr
Gov/Credit
Index:
Avg ~ 6.5yrs
BarCap 5-10yr
Gov/Credit Index:
BarCap US Credit Index:
BarCap US Treas Index:
Avg Duration ~ 6yrs
US Government,
Agency &
Treasury Bonds
US Corporate &
Mortgage Backed
Bonds

2013 INDEX RISK AND RETURN
25
For Illustration
purposes only.
Indices are not
available for direct
investment and
performance does not
reflect expenses of an
actual portfolio. Past
performance is not a
guarantee of future
results.
Risk
Return
Fixed income
International stocks
US Stocks
Second
Annual
Study On
Nonprofit
Investing
(SONI)

2013 PORTFOLIO BENCHMARK
INDEX RISK AND RETURN
26
For Illustration
purposes only. Indices
are not available for
direct investment and
guarantee of future
results.
Second
Annual
Study On
Nonprofit
Investing
(SONI)

27
How do the
investment
results
compare to a
blended
portfolio
benchmark?
What was the performance of a sample blended portfolio benchmark in 2013?
Representative, sample portfolio benchmarks are intended to give
context to performance results. The benchmarks were selected because
we believe they are the broadest index available in each broad category
(US stock, Intl stock, Bond, and Cash). They may or may not be
suitable benchmarks for comparison to any particular investor’s
portfolio or for the average results reflected in this study.
2013 Return 30/70 40/60 50/50 60/40 70/30
33.55% 20% 29% 38% 47% 56%
15.29% 10% 11% 12% 13% 14%
-2.02% 65% 55% 45% 35% 25%
0.02% 5% 5% 5% 5% 5%
8.72% 0% 0% 0% 0% 0%
Traditional Market
Benchmarks
Blended Portfolio Sample Benchmarks
Russell 3000
1Month US T-Bills
HFRI Fund-of-Funds
MSCI AW ExUS
BarCap Agg Bond
For Illustration
guarantee of future
results.

28
How were
the
investment
results
relative to a
blended
benchmark?
What was the performance of a sample blended portfolio benchmark in 2013?
•On an absolute basis, performance in 2013 was very strong
•Relative to a sample benchmark, performance lagged
significantly as nonprofits increased exposure to equities
2013 Return
6.93%
10.30%
13.68%
17.05%
20.42%
Traditional 40/60 Portfolio Benchmark
Blended Benchmark Portfolio (Stock/Bond)*
*Indexes do not reflect the fees associated with actual investments and such fees would reduce the
performance illustrated. Past performance is not an indication of future results and any investment
can lose value.
# Portfolios Avg Return +/- Index
9 8.59% 1.66%
9 10.58% 0.28%
26 11.08% -2.60%
20 12.00% -5.05%
29 13.66% -6.76%
2013 Results
Growth 70/30 Portfolio (60-70% Stock)
Nonprofit Investment Allocation
Conservative 30/70 Portfolio (20-30% Stock)
Mod Conservative 40/60 Portfolio (30-40% Stock)
Balanced 50/50 Portfolio (40-50% Stock)
Moderate Growth 60/40 Portfolio (50-60% Stock)
For Illustration
guarantee of future
results.

29
What level of
under -
performance
is
acceptable?
What level of underperformance is acceptable?
•Most nonprofits (45%) believe that over a 5 year time
frame, advisors and managers should be expected to
outperform their market benchmark net of all fees
•A surprisingly large number (23%) of nonprofits “didn’t
know” what level of underperformance was acceptable.
33 16%
12 6%
I don't know 46 23%
45%
Advisors are expected to outperform gross of their
fee, but underperformance up to the amount of their
fee is reasonable
After considering all fees, trailing benchmarks by
0.5% - 2.0% is reasonable
Performance should be measured in absolute
terms (for example CPI + 5%)
10%20
Given a 5yrs, advisors are expected to outperform
market benchmarks net of all fees
90
For Illustration
guarantee of future
results.

30
How much
do
nonprofits
pay their
advisors
and fund
managers?
How much do you pay your investment advisor and fund managers?
•As the investment balance increases, most nonprofits
tend to be able to reduce their fees
How many “don’t know” how much they pay their advisors and fund managers?
•The majority of responses “don’t know” their fees
•As reserve balances grow, fewer associations are unaware
of how much their advisors are being paid
Reserves Of: Association Public Charity
# Responses 46 25
$0-5M 1.45% 1.01%
$5-25M 1.13% 0.82%
$25+M 1.02% 0.99%
Reserves Of: Association Public Charity
# Responses 63 52
$0-5M 70% 81%
$5-25M 50% 48%
$25+M 45% 36%
Overall 58% 66%
For Illustration
guarantee of future
results.

31
How do
portfolio
expenses
impact
bottom line
portfolio
results?
Does knowing how much you pay impact overall portfolio performance?
*t(150) = -1.96, p=0.078
•Portfolio results are significantly lower for those who do
not know their investment expenses
How does paying higher fees impact investment returns?
•Overall, as portfolio expenses increased, average returns
decreased.
Average
Return
12.20%
9.98%
Fees are Known
Fees are Not Known
# Responses Average Return
35 12.54%
40 12.10%
17 11.56%
Annual Fee: 0.00% - 0.75%
Annual Fee: 0.76% - 1.50%
Annual Fee: 1.50% +For Illustration
guarantee of future
results.

32
How do
portfolio
expenses
impact
bottom line
portfolio
results?
How does the impact of not knowing fees change as asset allocations change?
•Portfolio results decline substantially when portfolio
expenses are unknown
Fees are Known
"Don't Know"
Fees Difference
11.69% 8.40% -3.29%
12.44% 10.90% -1.54%
15.36% 10.57% -4.79%
Portfolio Allocation
Balanced (50/50) Portfolio
Mod Growth (60/40) Portfolio
Growth (70/30) Portfolio
For Illustration
guarantee of future
results.

33
How do
portfolio
expenses
impact
bottom line
portfolio
results?
How does giving discretion to an investment advisor impact performance?
•Overall, giving discretion to your financial advisor only slightly
improves bottom line results, but not significantly
How does having an SRI mandate impact performance?
•Approximately 21% of those who had formal investment policy
guidelines also had a socially responsible mandate
•Those who had a SRI mandate experienced lower returns than
those without the restriction
Average
Return
11.51%
11.45%
Discretion
Non-Discretion
Average Return # Responses
12.64% 142
10.14% 38
No SRI Restriction
SRI Mandate
For Illustration
guarantee of future
results.

34
How does
having a
formal
investment
policy impact
portfolio
results?
How does having a formal invest policy impact performance?
*t(148) = 4.92, p < 0.01
•Overall, organizations who have formal investment policy
targets had significantly higher returns
Does changing asset allocation targets impact performance?
*t(121) = 2.44, p < 0.05
•Overall, organizations who stuck to their original asset
allocation targets had significantly higher performance results
Average Return
12.74%
6.34%No Formal Targets
Have Formal Allocation Targets
Average Return
13.79%
10.99%Making Change to Target
No Change to Target
For Illustration
guarantee of future
results.

AGENDA
35
Second
Annual
Study On
Nonprofit
Investing
(SONI)

KEY TAKEAWAYS
36
Keeping it Simple
in 2013 helped
respondents
perform better.
1. Great absolute returns in 2013 and more respondents
added to reserves than withdrew.
2. Close to half of the nonprofits participating held close
to 50% of their cash assets in long term investments.
3. Half of the respondents give discretion to advisors to
operate within the guidelines of the IPS.
4. The majority of associations have formal IPS’s with
asset allocation targets. Having a policy with asset
allocation targets, and not making changes to them,
improved ROI in 2013.
5. The larger the organization and the more aggressive
the asset allocation policy, the better the performance
results in 2013.
For Illustration
guarantee of future
results.

KEY TAKEAWAYS
37
Keeping it Simple
in 2013 helped
respondents
perform better.
6. Allocating to alternative assets likely detracted from
performance results in 2013.
7. In relation to traditional broad market stock and
bond benchmarks, participant returns trailed
significantly.
8. The lower the fees, the better the results. In part
because larger portfolios were more aggressively
invested and less expensive.
9. Not knowing fees (more than 50% of respondents)
correlated with lower results.
10. Portfolios with more US equity (particularly small
cap), less emerging market and alternative
investment exposure, and shorter term/corporate
bonds performed best.
For Illustration
guarantee of future
results.

CONCLUSION
38
Thank you for
attending!
Custom SONI reports can be created to
compare your organization’s policy and
results to your peer group for a flat fee.
We can’t thank you enough for participating
and we strongly encourage you to participate
again next year.
For more information:
• Visit www.npinvesting.org
• Or email info@raffawealth.com

DISCLOSURE
39
This information was gathered from reliable sources but
we cannot guarantee accuracy. Any performance related
information is based on participant responses and have
not been verified. Past performance is not an indication of
future results and any investment can lose value.
Performance results have been compared to balanced
benchmark portfolios comprised of broad market indexes.
The benchmarks were selected because we feel they are the
broadest market benchmark available in each broad
category. They may or may not be suitable benchmarks
for comparison to any particular investor’s portfolio or for
the average results reflected in this study. You should
consult with your investment professional to determine
suitable benchmarks for your portfolio.
Indexes do not reflect the fees associated with actual
investments and such fees would reduce the performance
illustrated.

Nonprofit Investing Survey Results

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