Tips for Successfully Navigating the OCIO RFP Process

To skillfully navigate market turbulence, non-profit organizations need intelligent financial guidance aligned with their values, mission, and goals. To meet this need, an increasing number of non-profits are exploring the services of outsourced chief investment officers (OCIOs). Choosing the right OCIO, however, is a complex process that can quickly become overwhelming.  Instituting an effective request for proposal (RFP) process can be the key to finding the right partner.

This article highlights how to create and execute an RFP process that ensures the firm you select is a good fit for your organization. From allocating sufficient internal resources to clarifying your goals, priorities, and expectations, follow these guidelines to build your OCIO RFP.

Allocate adequate time and resources to the RFP process

Because an OCIO is a fiduciary partner with a high level of discretion, choosing a provider that can drive long-term growth in a way that is consistent with your organization’s values is key. With so much riding on your selection, it’s critical to devote the time, effort, and staff needed to develop a highly effective process. This requires clarifying key selection criteria, developing screening questions to identify the most promising candidates, and assessing how their experience aligns with your organization’s needs and goals. Before instituting your search, be sure you’ve allocated sufficient resources to this demanding endeavor.

Identify priorities and key criteria

When selecting an OCIO, it’s important to clearly define your organization’s values, objectives, and mission from both a financial and a governance perspective. Financially, you’ll need to examine your organization’s spending rate, liquidity needs, goals for growth, and risk tolerance. Understanding key variables like these provides a basis for assessing each prospective firm’s potential to meet or exceed your financial needs.

Most non-profit organizations also use governance criteria when selecting providers to ensure potential partners are aligned with their values and mission. Increasingly, non-profits are incorporating specific questions in RFPs about providers’ experience building portfolios that meet environmental, social, and governance (ESG) or diversity, equity, and inclusion (DEI) requirements. Take the time to thoughtfully spell out your organization’s priorities in these areas so you can select the best provider who meets your financial and social goals.

Write purposeful questions

Once you have clarified your organization’s priorities and key criteria for selecting an OCIO, begin drafting questions that will reveal how potential partners match up. Questions about providers’ experience in the OCIO space and serving non-profits is a good place to start. Working from the financial priorities you’ve defined, include questions directed to a provider’s investment philosophy. For example, an OCIO whose offering includes alternative investments may be able to provide greater stability through periods of economic volatility by building a more diverse portfolio with more consistent returns. While alternative assets can impact the liquidity of your portfolio, it is an important fiscal consideration for non-profits, which are designed to exist in perpetuity but need liquidity to meet operational needs.

Be an active participant

The quality of the responses you receive is directly related to the quality of information you share about the organization.  This includes the current asset allocation, the investment policy statement, and information on fundraising and capital expenses. Often, organizations provide vague RFP questions or ask for a provider’s “best ideas” on how to build a portfolio. A quality OCIO will seek to tailor their offering to your organization’s specific needs.

Emphasize a long-term relationship

As an organization with a long time horizon, you need an OCIO who can integrate seamlessly into your team and is committed to a long-term partnership. Including an RFP question that asks applicants to describe what sets them apart from their competitors can help uncover what they consider the most important aspects of their practice. Promising candidates will include not only performance data but also examples that illustrate their commitment to non-profit clients and their long-term success. For example, a successful candidate may offer to support conversations with donors and fundraisers, educate board members about sound financial practices, or assist the organization’s partners at tax time. These kinds of differentiators demonstrate an OCIO’s interest in the long-term success of its clients.

Understand the market

Market volatility prompts many institutions to re-evaluate their financial services providers. While many organizations rely on past performance to assess an OCIO’s ability to meet their financial goals, drastic changes in the market can turn past performance on its head. Non-profits need sustained, reliable returns amid all types of market conditions. A successful applicant should be able to demonstrate their understanding of current market conditions and elucidate strategies for managing market upheaval, such as building antifragile portfolios. An OCIO should adapt to changing economic currents while meeting your organization’s goals.

Select an experienced, dedicated non-profit partner

By following these guidelines, your organization will be poised to select an OCIO that fits its priorities, needs, aspirations, and culture. For help organizing your RFP process, click below to download Verger’s complimentary RFP template.


Free RFP Template


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