AGB Search Principals Ms. Monica Burton and Dr. Margaret “Peggy” Plympton, in partnership with Jane Bierwirth, Co-Head of Asset Management for RSR Partners, hosted The Higher Education Investment Office: Strategy and Leadership, a virtual breakfast session held to discuss strategy and leadership in the higher education investment sector. This was the third event in this recently launched series, Leadership Connections in Higher Education.
The discussion was led by panelists Kari Fazio, Chief Financial and Administrative Officer for Bryn Mawr College; John Griswold, Senior Consultant for AGB Consulting; and Michael Stambaugh, Chief Investment Officer of the Carnegie Institution for Science. During the session, moderators encouraged discussion of endowment management strategies, the critical components to managing those strategies effectively, and the pros and cons of the various management options.
The session kicked off with a discussion about the factors involved in evaluating endowment structures and selecting the best parties for responsible management of that endowment. The consensus among the panel members was that the structure and management of the endowment should regularly come under review and reflection. There are important questions to ask when considering the efficiency of an endowment management structure, said Fazio, including which structure would provide access to the best managers, which would offer collaborative advantages with the finance team or development office, and which would provide for the “nimbleness” required to react and invest appropriately.
But how do institutions appropriately evaluate the governance structure of the management of its endowment? And how do they measure the endowment’s success? Besides the obvious measuring of performance, endowment success is measured by “intergenerational equity,” said Stambaugh. It is crucial that the endowment be able to provide the same level of resources for the next generation, Stambaugh asserted – not only in financial ways, but in engaging with students and introducing opportunities for programs and internships as add-ons to the return. Griswold expressed a similar sentiment by maintaining that when partnering with an outsourced CIO (OCIO), the institution should be sure to take an in-depth look at how the outside firm aligns with the institution’s mission, placing a value on ensuring harmonious cooperation between inside and outside management structures to aid in success.
Higher education endowment management is a complex topic, and when making the decision to change or evaluate the management structure, there are pros and cons to all three of the structural options currently employed across higher education: in-house management, outsourced CIOs, or relying on internal volunteer structures. The panelists agreed that institutions would do well to consider flexibility and responsiveness to the changing demands on the endowment, including the increasing demand for transparency in the management and reporting of the endowment’s activities – one of many developing social trends affecting business models in higher education. By providing transparency and clarity to the community, institutions and management firms are confirming their commitment to being inclusive and having meaningful discussions about the future of the endowment.
With so many variables to take into consideration when managing an endowment, is there a right or wrong model to apply to a management structure? Are the current models outdated, and is there room for a new model of higher ed financial management? How does the endowment and the financial structure of each institution fit into that model? Bierwirth charged panelists and participants to take these questions back to their institutions and keep them in mind for review and future decision making.
AGB Search and RSR Partners have collaborated to bring important and relevant topics and discussions with high-powered panelists to a wide range of higher education leaders. Participation in the Leadership Connections in Higher Education series is by invitation only to facilitate small-group discussion; however, inquiries to participate and topic suggestions are welcome. To learn more about the sessions, please email Monica Burton (email@example.com) and Margaret “Peggy” Plympton (firstname.lastname@example.org).
About AGB Search
AGB Search, based in Washington, D.C., specializes in providing tailored services, including permanent search, interim search, and compensation evaluation, to higher education institutions. Founded by the Association of Governing Boards of Universities and Colleges (AGB) in 2010, the firm has a unique understanding of the qualifications critical for effective higher education leadership. The firm has conducted more than 750 searches at institutions ranging from small, private colleges to large public institutions and research universities. www.agbsearch.com.
About RSR Partners
RSR Partners is a leader in corporate governance consulting, board director and senior-level recruiting, and strategic talent advisory. The firm measures its success based on the value great leadership creates and the transformative impact it can have on its clients’ business. The company was founded in 1993 by its Chairman Russell S. Reynolds, Jr.
The RSR Partners Asset Management Practice spans a range of client types and job functions, providing a deep network of investment leaders and professionals throughout the industry. The team has experience recruiting Trustees, Chief Executive Officers, Chief Investment Officers, Chief Operating Officers, and entire investment organizations. The Practice has particular expertise in the Endowment & Foundation space and enjoys an excellent reputation with industry practitioners. We have amassed a robust network of E&F investment professionals who serve as both clients and sources for all our searches. www.rsrpartners.com.