CHAPTER 6

Governance Structures

When the facts change, I change my mind. What do you do?

—John Maynard Keynes

The issues we have so far discussed and their implementation are all subject to the structure of governance you select. Surprisingly, the structure you select is highly predictive of your success. While there isn’t a “one size fits all” governance structure, we will focus on four primary models that are in vogue with many institutions and discuss a few variations within each model.

The first and simplest model is what we will call the DIY Model. In this model the board, or a subset of the board (the investment committee or even the CFO), manages, governs, and makes all investment-related decisions. This model is suited for organizations ...

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