Paying it forward: A Fidelity CIO’s journey to purposeful philanthropy

In a candid conversation about how his early life and career shaped his nonprofit journey, Lionel Harris, Fidelity’s chief investment officer in the High Income and Alternatives division, highlights themes of philanthropy, strategic giving, leadership, and impact. Harris spoke with Danielle Frissell, senior vice president of the Endowments and Foundations business in Fidelity’s Institutional Client Group.

Frissell: You are on the board and investment committees of several nonprofit organizations. What inspired you to take on these roles?

Harris: Growing up as a young man in a middle- to lower-middle-class environment, my family and I benefited from a helping hand—including government assistance. So, I view these programs as giving a helping hand to people in need. If you are lucky—knock on wood—that kind of support can result in wonderful things. I attribute the support that my family and I received in shaping some of the opportunities I have experienced. As I started to achieve a certain level of success in my professional life, I felt a strong pull to give back and contribute to the nonprofit space. It is personally rewarding because that support can give people a leg up, the way that others did for me.

Frissell: On a personal level, as you searched to find the right nonprofit to support, what were some of the key things you were looking for?

Harris: As part of my participation in a Fidelity charitable giving workshop, my wife, Irene, and I participated in discussions on goal setting, targets, and areas of focus. That is when we realized we were giving here and there, but it was not focused, and not strategic.

So, we asked ourselves: What do we really care about? In the hierarchy of what we cared about from a charitable perspective, racial equity was a priority. It was about helping young people become better versions of themselves and health equity. So, we focused on those areas. That has been a guiding light for us. One nonprofit I currently serve on is in the eye of the storm from a racial equity perspective and delivers a high social return on investment.

Social return on investment means that even a modest contribution can create meaningful impact—whether it is for a family in Boston, New York, Chicago, or beyond. It is about giving children all the opportunities that my kids had growing up—like basic material needs, parental coaching, and strong community connections. Another nonprofit that I have been involved in over the years provides basic items to people living in some of the poorest and most horrid conditions on the planet. In places like Haiti, Cameroon, and Sierra Leone, where governments and environments can quickly change, the need to save lives is heightened. You do not want people to die because they lack access to a $1 dose of penicillin.

For me, it was important to be part of something that offered a high return on social investment, racial equity, and health equity. It had to be where I felt I could help move the needle. I did not want to sit on a board where we rubber-stamp decisions or just quietly listen. I wanted to contribute and have an impact from a personal standpoint.

Frissell: How do you measure the effectiveness of a nonprofit board?

Harris: That is a question I have wrestled with throughout my time volunteering on boards in the nonprofit space, especially in the context of globally addressing needs. One way to measure effectiveness is by looking at the impact and outcomes of the organization. But it is also important to recognize the unique role of board members. Sometimes it is difficult to convey this, but being on a board does not mean having your hands on the joystick. Instead, your role is to offer perspective, provide a degree of wisdom, and help connect the organization to the right people or resources. It is about governance and guidance—not execution.

Frissell: What advice do you have for organizations that are undergoing change—whether in terms of resources, leadership, or other issues?

Harris: Change is constant—and nearly always certain. Trust in the organization's mission and the people sitting beside me on the board has been my secret weapon when it comes to stress and change. Whether it was COVID or turnover at the executive level, knowing that we are in it together made the difference.

Most important is for the board to choose the right leadership; and to trust the leader, and his or her capabilities to navigate change. Second, board members should be able to have a voice in how that leader is compensated, and finally, agree on the strategic plans for the organization. If you do those three things well it is much easier to navigate change effectively. It is vital that you are all rowing in the same direction.

Frissell: How do you view your responsibilities as a board member and the head of an investment committee?

Harris: At its core, my role as a board member is to help ensure the sustainability of the organization. Sustainability means many things: It is about making sure we are fulfilling the organization’s mission and helping the population that needs it, be they babies, mothers, or families. It is also about making sure the organization is financially stable. From that perspective, it means being a shepherd, a steward of the organization’s resources.

I have been at Fidelity for 30 years working in many asset classes and it is helpful is know how various assets classes can align with the goals of the organization. But when it comes to giving specific advice, a role I played on the investment committee of one organization I work with was to choose someone else to manage investments because other committee members may not be empowered as fiduciaries to give specific advice on investments. That is how an outsourced chief investment officer (OCIO) can help an organization. It can be a perfect marriage.

An investment committee must understand the finances of the organization and the resources at hand. We knew we needed long-term investments along with income-producing investments from which we could draw cash. And we needed a third funding bucket, or “kitty bag,” that we could draw from as we expanded the organization. The investment committee defines those buckets, but it is the OCIO’s role to populate those buckets.

Frissell: Within a committee-based decision-making framework, how do you guide the group toward consensus?

Harris: It is important that all voices are heard. My goal is to get all the different ideas on the table. Often, when that is done, the group more easily gravitates toward consensus. For me, it is important to have diversity of thought and background. Diversity means little if we are not actively ensuring that all the voices and viewpoints are heard. Only then can you get the best ideas. Sometimes, the best decision is to say: “Let’s just put a pin in this right now and we will come back to it.” Other times, the investment committee may land in a place that everybody can agree on. My style of leadership is to look to the group for ideas and opinions. I do not claim to have all the answers, and we make decisions as a group.

Frissell: Earlier you mentioned working with an OCIO. What factors did the investment committee consider when deciding to hire an OCIO instead of managing the portfolio internally?

Harris: There was initially a lack of structure and responsibilities. No one felt empowered to make decisions. As the organization grew and roles were codified, I was asked to step into the finance and investment committee. We leveraged the expertise and knowledge of the people already on the board. We then called upon appropriate experts, including OCIOs, to discuss basics about the organization, its mission, and its financial needs. They came back with proposals, and we interviewed them and decided which of them we wanted to work with—that decision was one part about the proposal and one-to-two parts about the OCIO provider.

For example, focus and scale of working with nonprofits was a big plus. We wanted to know that a dedicated team would be available to support us across all dimensions of the process. We wanted to feel confident that support would be available not just for the investment side, but also for operations—things like transitioning accounts from our previous investment advisor and knowing who our main point of contact would be. All of that became clear during the interview process. For the OCIO we chose, it was evident there was a dedicated team and ample resources behind the organization. Their focus on managing nonprofit finances was apparent, and that gave us confidence. I should note here that to avoid to any conflict of interest we did not include Fidelity in this process.

Frissell: How do you evaluate the performance of an OCIO? Do you use benchmarks, and if so, do you prefer blended benchmarks or an inflation plus spend benchmark such as CPI+5¹, for example?

Harris: Performance and fees are at the top of the list. In terms of evaluating an OCIO, it would include how communicative and responsive they are when we need support, and how proactive they are in keeping us informed. Another important dimension is thought partnership—offering insights through webinars and updates on timely topics like tariffs or shifts in investor behavior. These resources are incredibly valuable. It is important for OCIOs to provide us comfort that we are doing a good job for the organization and that we have a reasonable asset allocation. It is about the level of engagement, responsiveness, and the resources they provide the organization.

Benchmarking can mean many things. We do not use CPI+5 as a stated benchmark. While we review performance benchmarks, we also are focused on the resources and the level of servicing from the OCIO. For our portfolio, we built a two-prong approach. First, we know the organization has capital expenditures and we must meet those needs. We did not want to leave money on the table by keeping it in a bank account. By using a laddered fixed-income strategy, we can earn a real return on those assets as we wait for them to be drawn down and used by the organization. Second, we are positioning for growth, and we have tilted another portion of the portfolio toward equities, including a modest allocation to sustainable investments.

Frissell: How do you think about board composition in terms of diverse backgrounds and skills sets? How do you start building such a board?

Harris: The right size and composition are important. For any type of board, the right size means not even one extra person. As for composition, it is essential to ensure the board has all the appropriate skills, viewpoints, and backgrounds to effectively meet the organization’s needs.

Boards need to align with the organization’s mission and growth, and even have a “wish list” for what the organization should look like in three to five years—and even farther into the future. Consideration should be given to the skill sets and backgrounds that can best facilitate the organization moving in the right direction. For example, if the nonprofit was primarily domestic and is looking to expand internationally, you may want to consider adding to or reconstituting the board. Oversight is strategically important to a company, and I look at charities and nonprofits the same way.

1. “CPI+5” typically refers to an investment return that is 5 percentage points higher than the Consumer Price Index (CPI), and is often used by endowments and foundations, particularly private foundations with mandated spending rates, who often aim to achieve a return of CPI+5% or more to both cover their annual expenses and preserve the purchasing power of their assets over time.