In Trust magazine talked with Doug MacGray, founder of Stonecrop Wealth Advisors and a member of the Missio Seminary board, about board responsibilities and considerations for endowments, investments, and markets. This is an edited version of the conversation.
How should a board member approach volatility and anxiety in the market?
It’s easy to get really nervous about the market. If you’re not in the market as a profession, try to look at it from a high enough level to keep some perspective. By all means, I think you should look at returns and performance painstakingly every quarter. But daily? No. Follow the news, but don’t look at what your returns were that day.
What should someone who is new to higher education finances know about investments?
They need to understand the philosophy of the institution’s investment strategy. You want to make sure as a fiduciary you’re fulfilling your role, confirming the investments are properly managed. So many times, the way the funds are being managed is something that’s essentially historic. It’s often the case that people at the investment firm and the board have changed since the original investment strategy was determined. With turnover, boards often lose track of what’s going on. You need people on the board who have the expertise to ask the right questions so the board can do its job and hold the investment advisor accountable.
What should a board member know in general about endowments?
Endowments are supposed to be what they call a “perpetual portfolio,” meaning they’re essentially around until the Lord comes back. The people who fund endowments expect the money to create a perpetual funding source for the institution. Endowments are not something to be raided when there’s a bad financial year. And there are legal issues created if we don’t follow donor wishes. Even without that, I believe there’s a moral issue of being a good steward and being faithful to that agreement. Being faithful creates a discipline that can help perpetuate the mission of the institution. Endowments really are almost like a pension or an annuity. That’s philosophically how people need to look at it.
What about schools that don’t feel endowments are faithful to God?
If an institution really feels called to live hand to mouth every year, and that God’s going to take care of them each year, that’s a philosophy. But I think a seminary or any institution of higher learning has students, alumni, and supporters who want to have some level of comfort that the institution is going to be there tomorrow, especially if they’re giving to it and trying to help the institution do well. That comfort level will only be helped if that institution is being run well financially. An endowment can help that.
Given the current situation, how do you see seminaries moving forward?
I think seminaries need to think like businesses in this environment in the sense that I think we’re called to be creative and innovative. Take online learning, for example. Some institutions were either fighting against it or doing it very gradually, yet overnight they had to become an online institution. Whatever needed to be done to figure that out this past year, they did it. Some things are forced upon us like the pandemic, but with other things, we can plan. We want to be ahead of the curve if we are to thrive in the years to come. The pandemic will not be the last unanticipated event that occurs.