Hear from Tanya Suba-Tang and Bahman Mirzaee as they discuss the current challenges and opportunities facing endowments and foundations within the investment landscape. Mirzaee, in his capacity as a principal at Mercer, delineates the various types of organizations that fall under the purview of endowment and foundation management, including educational institutions, private and corporate foundations, and cultural organizations such as museums. He emphasizes the fiduciary responsibilities these entities hold regarding the management of assets derived from donations, grants, and other financial contributions, elucidating the critical role they play in ensuring the sustainability of their respective missions.

As the conversation unfolds, Mirzaee introduces the three primary ways in which Mercer supports its clients: through Outsourced Chief Investment Officer (OCIO) services, advisory roles, and direct investment assistance. The OCIO model, in particular, stands out as a rapidly expanding service that allows organizations to share fiduciary duties with Mercer, thereby enhancing their investment capacity while benefiting from the expertise and resources that Mercer brings to the table. Mirzaee articulates how this collaborative approach not only alleviates the burden on organizations with limited internal investment capabilities but also fosters a deeper understanding of their unique investment needs, particularly in a landscape characterized by increasing market volatility.

Transitioning to the contemporary challenges that endowments and foundations face, Mirzaee provides a thorough analysis of the macroeconomic factors influencing investment strategies. He discusses the repercussions of shifting interest rates, demographic trends, and legislative changes that affect funding structures for educational institutions and other nonprofits. Notably, Mirzaee highlights the impending demographic cliff, projecting a significant decline in the number of graduating high school seniors, which poses a substantial risk to the enrollment and funding stability of many educational organizations. Furthermore, he addresses the impact of recent tax reforms on charitable giving, noting that changes to the deductibility of donations could influence donor behavior and subsequently alter the financial landscape for nonprofits. Through this comprehensive discourse, Mirzaee underscores the complexities of navigating the investment landscape for endowments and foundations, ultimately providing valuable insights into the strategies that may be employed to mitigate these challenges and capitalize on emerging opportunities.