Every market crisis is unique, and fiduciaries overseeing endowment and foundation portfolios should always question the appropriate response. Particular circumstances of each organization and the way capital markets decline differ from crisis to crisis. The specific tools available to address those stresses also vary as markets evolve.
This paper describes a general framework for addressing the priorities for action in any market crisis, with a particular focus on the circumstances around the current Covid‑19 calamity.
The framework is comprised of four steps:
- Assess the organization’s liquidity needs.
- Establish or raise liquidity reserves
- Understand the portfolio
- Consider opportunities