TY - JOUR T1 - Warren Buffett’s Advice … Good for Nonprofit Endowments? JF - The Journal of Wealth Management DO - 10.3905/jwm.2023.1.193 SP - jwm.2023.1.193 AU - Crystal Evans AU - Gregory Evans AU - Maria A Quijada Y1 - 2023/01/06 UR - https://pm-research.com/content/early/2023/01/05/jwm.2023.1.193.abstract N2 - Owing to their personal success, affluent individuals are often asked to serve as nonprofit board members to help guide endowment investment policies. The coming wealth transfer, combined with a low-yield financial environment, adds importance to endowment financial management. Standard financial management favors a 60/40 allocation between equities and bonds. Warren Buffett, however, rejected this standard financial advice and directed the trustees of his estate to invest in a 90/10 allocation; 90% invested in the S&P 500 Index and 10% in short-term bonds. This article tests this strategy against various allocation methods for nonprofit endowments using a 5% payout. The heavier stock-weighted portfolios provide a higher likelihood an endowment balance will stay above the nominal initial balance and the inflation-adjusted balance, leading to a more certainty the endowment can be relied on for operational expenses. The tipping point appears to be the 80/20 allocation. Allocations with more than 20% bonds perform noticeably worse and allocations with less than 20% bonds perform marginally better. ER -