Our Board of Trustees comprises seven Trustees who act jointly as a corporate body created under the powers now in the Charities Act 2011. Trustees are appointed by other Trustees for a standard tenure of two five-year terms. The Board of Trustees meets four times a year and retains overall responsibility for all activities of the Foundation. All strategic and policy decisions are taken by Trustees collectively, advised by a number of committees.
Our Chief Executive, supported by an Executive Board, is responsible for the management of the Foundation and for advising Trustees on strategic and operational matters. We house several semi-autonomous bodies which, although legally part of the Nuffield Foundation, have their own governing structures with distinct terms of reference. These are the Nuffield Council on Bioethics, the Ada Lovelace Institute and the Nuffield Family Justice Observatory.
We ensure that all applications for research, analysis and development grants are independently peer reviewed, including representatives from the policy and practice worlds, as well as research experts. We require ethical scrutiny of proposals involving primary research, and evidence of a commitment to the communication of research findings. Trustees make final decisions on these applications.
Trustees delegate most investment decision to an Investment Committee comprising five members, of which three are trustees and two independent members. The trustees tend to have sound lay investment knowledge and this is supplemented by two independent experts, one of whom will have experience of fund management and the other as an equity manager.
The Committee is served by a part time Investment Director and advised by an Investment Consultant (currently Cambridge Associates). The Committee does not see managers but receives reports from the Investment Director and the two independent experts at its regular meetings. Commitments to illiquid funds are taken after consulting with the Investment Consultants.
The Chairman of the Foundation chairs the Investment Committee which also reflects the centrality of the portfolio to the Foundation’s financial wherewithal. Every 18 months or so the Investment Committee is required to account to the full body of Trustees, and in particular to set out the investment risks to which the organisation is exposed. The purpose of this is to ensure that all trustees are prepared for adverse markets and can remain confident in the rational of the strategy in difficult circumstances. The strategy is underpinned by our Investment Beliefs.
Our income comes from the interest on our investments. We do not fundraise or receive funding from the Government, making us financially and politically independent.
Our long term approach to investing is based on keeping a liquidity buffer in short dated gilts, which when combined with portfolio income, will provide five years’ spending cover. This is invested for security first, then liquidity and last of all, return. With that sum assured we invest the balance for a maximum return (notwithstanding the associated volatility) in global equities and private equity/venture capital. Spending is calculated using a Constant Growth method linked to the indexed value of the endowment. In 2018 spending was 5.3% of the net asset value. We invest in public equities using five global managers, each with the same mandate but who are selected to be uncorrelated to the others, and we regularly rebalance between them, taking from the best performers and giving to the others in order to maintain an equally balanced portfolio. The private equity/venture capital portfolio is deliberately concentrated on funds of usually less than $500m. The short-dated gilts portfolio is managed internally. In 2015, Trustees decided to reduce the risk profile after many years of above average returns. This decision has given the organisation increased stability while it introduced a step increase in its spending plans. This included a time-limited Hedge Fund experiment. We therefore have both a strategic asset allocation and a de-risked allocation.
|Asset allocation at 31 December 2018||Actual||De-risked||Strategic|
|Private equity/venture capital||16%||15%||20%|
|Short dated gilts||19%||19%||10%|