Although these commitments “may meet the investment objectives and risk tolerance of the organization, such arrangements may affect future members' ability to effectively manage the financial resources to meet the funding needs of the organization,” one of the principles states in the 28-page set of standards released Wednesday.
The CFA Institute approved the code in October, said Jon Stokes, head of the standards of practice group at the CFAI.
The institutions should “consider liquidity” and “incorporate, as appropriate, limitations or restrictions on investments with defined capital lockup periods,” the code states.
The code establishes a framework of best oversight practices for board members, staff and others responsible for managing the financial assets of the organizations worldwide.
Among other principles, the code states members of the institutions' governing bodies must “avoid conflicts of interest pertaining to the implementation of the organization's investment strategy whenever possible. Disclose annually and manage actual and perceived conflicts of interest that realistically cannot be avoided.”
Compliance with the code is voluntary. The CFA Institute encourages organizations to notify it when they elect to adopt or comply with the principles of the code. But the CFA Institute does not verify compliance, according to the code.
The CFA Institute collaborated with organizations such as Mercer, Cambridge Associates, The Conference Board, the Commonfund Institute and the National Association of College and University Business Officers in creating the code.
