Georgia foundation outsources portfolio to new TIAA unit; latest in trend

  • Why this is important: More smaller institutions are outsourcing their investment portfolios

Medical College of Georgia Foundation is the latest endowment to outsource the management of its investments, with TIAA Endowment & Philanthropic Services taking over as CIO of the $230 million portfolio.

Earlier, Prime Buchholz, the Portsmouth, New Hampshire, investment-consulting firm, advised the endowment but did not have discretion in investments, a source familiar with the endowment said.

The medical college endowment had a 3.5 percent allocation to private equity, its 2017 annual report showed. It invested in PE through various funds of funds, including Landmark Equity Partners, RCP Advisors, Wilshire and Siguler Guff & Associates, its Form 990 said.

The trend of smaller endowments outsourcing their investment portfolios will continue to gain traction, said Charles Skorina of Charles Skorina & Co, which helps recruit board members, CIOs and other personnel for institutional investors and financial institutions.

One reason is smaller endowments find it difficult to access quality PE managers, Skorina said. Outsourcing the investment portfolio also reduces personnel costs, he said.

In June, the American Red Cross hired Cambridge Associates to manage its $3 billion investment pool. Cambridge was also hired by the University of Louisiana at Lafayette Foundation in May to manage its $170 million portfolio.

In January, TIAA combined its Houston-based outsourced business subsidiary, Covariance Capital Management, and planned-giving-advisory firm, Kaspick, to form TIAA Endowment & Philanthropic Services, the source said.

Covariance managed assets for University of Connecticut Foundation and Christian Science Church, among others. Given TIAA’s reach, however, the business was “a bit of a disappointment,” the source said.

The new TIAA entity provides outsourced chief investment officer services and planned gift investment, administrative, consulting, and reporting services to its nonprofit clients.

In addition, TIAA Charitable will complement the services by providing turnkey solutions to help institutions expand their fundraising capabilities. TIAA Charitable helps individuals and corporations invest in donor-advised funds.

“With the new entity, TIAA should be able to capitalize on its incredible presence in the educational field, and deliver great results,” Skorina said.

Action Item: TIAA Endowment & Philanthropic Services: