A Total Portfolio Management Approach begins by ascertaining the ultimate intent of the asset owner and then exploring how best to structure all available assets in pursuit of that goal. Some goals are best achieved through grants, some through capital investments or low interest loans, but all can benefit from synergies and lessons from across all types of capital.
This is an important evolution from both traditional wealth management and philanthropic practice, for it allows asset owners to draw upon all of their assets to meet reasonable financial targets (or fulfill fiduciary responsibilities in the cases of trustees of foundations and pension funds), while simultaneously advancing social and environmental objectives. Within this approach, one does not ask: “How much financial return do we have to surrender to achieve social impact?”, but rather: “What is the appropriate level of financial return for this capital strategy, and what is the best way to understand the nature of the social impact it generates?” In this way, one can do well and good at the same time.
Three fundamental concepts in the Total Portfolio Management Approach: