The Role of Governance in an OCIO Relationship

The Role of Governance in an OCIO Relationship: Safeguarding Oversight and Control

An Outsourced Chief Investment Officer (OCIO) provides significant advantages, particularly for nonprofits and other institutions that lack the internal resources to manage complex investment portfolios. These advantages range from access to a broader range of investment opportunities to expert risk management and fiduciary oversight. However, one common concern is the maintenance of oversight and control in the organization. Below we discuss the pivotal role of governance in an OCIO relationship and how organizations can ensure their interests remain at the forefront.

Clarity of Roles and Responsibilities

It’s essential to understand that hiring an OCIO doesn't equate to forfeiting control over your investments. The OCIO serves as an extension of your team and works towards your institution's investment objectives under your governance framework. Having a well-delineated OCIO contract, specifying the respective roles and responsibilities, is the foundation of this understanding. This document will lay out what decisions and activities are delegated to the OCIO and what remain under the purview of your board or investment committee.

Effective Communication and Transparency

A robust governance framework within an OCIO relationship relies heavily on open, transparent, and regular communication. Regular reports from the OCIO about investment performance, risk, and market dynamics are vital. Equally important is the OCIO's responsiveness to inquiries and their ability to provide detailed explanations of their actions and decisions. A good OCIO will offer full transparency and operate with a high level of integrity to build trust with your organization.

OCIO Accountability

Holding the OCIO accountable is another critical element of governance. This accountability can be enforced through performance measurement against agreed-upon benchmarks and objectives outlined in the investment policy. Regular reviews and assessments of the OCIO's performance will ensure they are meeting your organization's expectations and objectives.

Alignment with Mission and Values

It’s crucial that the OCIO aligns with your organization's mission and values. For instance, if your organization emphasizes socially responsible investing, your OCIO should be capable and willing to prioritize investments that meet these criteria. The OCIO should also respect and adhere to your organization's risk tolerance and investment preferences.


Governance in an OCIO relationship hinges on clearly defined roles and responsibilities, transparency, accountability, and alignment with your organization's mission and values. It's a two-way relationship built on trust and regular communication, ensuring that your organization maintains oversight and control. This robust governance model can ensure that the OCIO relationship is successful, productive, and value-adding, allowing your organization to focus on its core mission.

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