Fiscal issues Trustees need to discuss

`Ano`ai kakou…  Back in July (2012), I travelled to New Haven, Connecticut, to attend the Commonfund Endowment Institute, Level II, at the Yale School of Management.

The Institute provides in-depth courses on how nonprofit organizations such as OHA should invest their funds in the stock market and in other asset classes such as emerging markets, natural recourses, and commodities, etc., in order to secure funds in perpetuity for future generations.

In these very uncertain times, it is important for trustees of endowment funds and nonprofits to be well educated on the details of how money-mangers are investing their funds.

The following are my recommendations for OHA based on what I learned at the Institute:

(1) Trustee Training – OHA should invite organizations such as Grant Thornton to conduct educational workshops for the board, such as one on Governance.  My feeling is that if all trustees attended seminars, like those offered by Commonfund, we would have a more active and informed board who would be able to make good decisions for our beneficiaries.

(2) Split the Money Committee – OHA’s Asset & Resource Management (Money) Committee should be separated into two committees: (1) Budgeting; and (2) Investments.  Volunteers should be asked to serve on the investment Committee.  I have made this suggestion in the past, but the response has always been, “That ain’t gonna happen, Rowena.”

(3) Trustee Involvement – Trustee engagement must be improved.  Some Trustees are passive, nonfunctioning, or afraid of speaking up for fear of being called a “troublemaker,” “micro-manager,” or “hard to get along with.”  All Trustees should be allowed to have meaningful participation in planning and not just leave everything for the Administration to decide, as has been the practice for the last ten years until 2012.

(4) Low Risk Investments – OHA should look at investing in U.S. Treasuries, Commodities, and Natural Resources as they are considered low-risk.

(5) Money Manager Contracts – The Trustees should re-examine all contracts with money managers.

(6) Control Spending – The higher OHA’s operating expenses (commitments, salaries, etc.) the more we need to concentrate on how well we do with our investments.  The trust fund will suffer if we continue to spend at the rate we are spending now.  Intergenerational funds are needed to ensure perpetual funds for the future.

(7) Inflation Funds – These funds reduce the risk of losing your investments in a down market.

(8) Surplus Funds – We should set aside funds for long term, perpetual use.  Being a quasi-governmental trust allows us to be more creative in growing a perpetual fund.

(9) Spending Policy – OHA needs to revisit the spending policy and lower its spending rate to 4%.  OHA also needs to prioritize its spending and consider separate spending policy for different types of investments.  Not prioritizing allows Trustees to fund anything or anyone they favor.


In summary, the Commonfund Endowment Institute provided me with an excellent investment education.  The information shared by Yale and Harvard professors, as well as top economists and other experienced investors and money managers, continues to be very valuable to me as a Trustee.  Aloha Ke Akua.