Looking through the Overton window
Picture a group of trustees gathered at charity awards dinner. The room is lively, conversation flows, and amid the clinking glasses, someone proposes, “What if we moved 100% of our charity’s investments into equities?” Suddenly, hands pause mid-air, and silence descends. Such a suggestion? Outside the Overton window. Overcoming biases is like convincing your partner to adopt a dog by first suggesting a pet tiger.
Coined by Joseph Overton in the 1990’s who probably never imagined his name would become synonymous with political discourse and memes recently, the concept helps explain why some ideas go from “unthinkable” to “policy” faster than you can say “target CPI +4%”.
This evolution is visible in global politics and increasingly apparent in the world of charity fund management. Ideas once viewed as fringe or radical have found their way into the mainstream. In charity investments, regulatory changes, industry consolidation and widespread adoption of benchmarks have funnelled a once-diverse set of investment strategies toward the now standard “inflation plus” approach.
In a recent review for a charity seeking CPI +4% returns, we looked at the characteristics of 8 mainstream charity investment managers. The conclusion of managers A to G risk and returns over the past 3 years was striking:
Their asset allocations were similar, as were the levels of service and overall costs fell into a narrow range. This uniformity has prompted many trustees to react in two ways: first, by observing that their options seem rather uninspiring; and second, by finding little reason to consider switching fund managers.
At Yoke, with our many years of experience working with and in charities, we look beyond the mainstream options to suggest what we think might make a real difference. We’re looking through an Overton window because we are not afraid to suggest different allocations of capital to achieve higher returns. We also like passive investment, as that can be a good option, and if your asset allocation and service are similar, it helps reduce costs (the only certainty in this business).
If charities are seeking CPI +4% they should consider the Overton window. Trustees who understand it can lead with courage and credibility. So next time someone says, “Let’s move 100% of our charity’s investments into equities or passives,” don’t panic. Just check if the window’s open—and if not, maybe give it a nudge.