Drawing on research that Cambridge Associates has conducted with major grant-making foundations, this paper discusses the shifting mission-aligned investment landscape and the importance of governance in developing and overseeing a mission-aligned investment program. We lay out important steps in the mission-alignment process to define the scope of the commitment, structure, key milestones, and measures of success.

The “secret sauce” to long-term investment success is, in most cases, the governance that guides and oversees the investment program. Governance plays the special role of steering endowments toward long-term goals, through good times and bad. Good governance is a steady presence that does not get overly confident or discouraged by a single decision or caught up in the latest trend. Good governance is rewarding for the institution it serves and the investment committee members who participate.

It starts with an understanding of the roles and responsibilities of governance and an appreciation of the long-term goals of the investment program. Clear definitions help investment committee members, staff, and advisors understand and do their jobs effectively and establish an environment of accountability.

There is an art and a science to building an effective investment committee. Governance excels when a diverse group comes together with complementary contributions, a shared understanding of their role in the endowment’s long-term goals, and a spirit of debate and respect that makes the work enjoyable.

The work of successful investment committees are supported by disciplined processes and work habits. Their work is conducted in a respectful and welcoming culture, with strong leadership, clear expectations, and intellectual stimulation.