For Nonprofit Groups, the Virtue in a Simple Investing Strategy

In Social Security and Retirement On

That’s why Larry Kochard, who oversees the University of Virginia’s $8.6 billion endowment and sits on the board of the $18 million Virginia Environmental Endowment, says the simple solution, equity and bond index funds, makes sense for smaller institutions.

Finding good outside advisers is possible for institutions without deep pockets, he said, but it is very difficult. “The odds of a small endowment finding the right managers are very slim,” Mr. Kochard said.

For the most part, he advocated modest goals, saying: “If we are watching our allocations and spending and rebalancing, we are meeting our obligations.”

Ms. Shuman also favors index funds for nonprofits, but warns that the success of index funds over the past several years has largely been driven by companies like Facebook, Amazon, Netflix and Google.

“They drove a disproportionate return,” she said, and if these stocks decline, the indexes will fall, too. She recommends Vanguard’s managed equity and international funds for low-cost but actively managed alternatives.

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