We founded Trust Analytics Group upon the premise that nonprofit institutions that actively manage their beneficial interests in outside managed charitable trusts will receive greater financial support and flexibility from these important assets. The adoption of total return investment regimes for charitable trust assets, coupled with a twenty year decline in dividend yields, have led to a decline in “trust accounting income.” Less trust accounting income means lower distributions, even as principal asset values increase. More than 45 states have adopted legislation intended to remedy the inequities caused by the relative decline in trust accounting income and to promote total return investment practices. These laws, however, are not self-implementing and need to be understood and promoted by the beneficiaries. The continuing consolidation in the financial services sector has only exacerbated this problem.

What exactly is active management? Active management means understanding the dispositive provisions of the trust instrument in the context of its establishment and in light of recent changes in state fiduciary laws which govern the administration of charitable trust assets. Active management means understanding the investment strategy being followed by the investment managers of your charitable trust assets. We call these assets the external endowment as they are the functional equivalent of an institution’s internal endowment. Unlike the internal endowment, however, the external endowment generally receives very little attention. Finally, active management means understanding the administrative cost and expense structures under which your charitable assets are being managed.