We advise our clients on a specialized basis to support the success of the broader investment program.

In the course of advising foundations and endowments, we often address matters that require specialized strategies or recommendations. Many of these areas fall outside the realm of advising on the program’s investment strategy, but are central to the smooth operation of the institution’s endowment. 

Some areas where we have advised include:

  • Evaluating or proposing a governance structure. Optimal decision-making requires clear delineation of accountability, roles, and responsibility. In the case of start-up endowment programs, clients will often look to Cambridge Associates’ experience with establishing investment offices both historically and more recently.
  • Assessing the role of debt within the institution’s overall financial structure—including the types of expenses that should be debt-financed, an evaluation of debt capacity, and the development of a debt-financing strategy.
  • Providing a financial equilibrium analysis of an institution’s current and future financial health. We develop a model that covers all the resources of an institution: current net revenues, permanent capital (endowment), temporary capital, physical assets, bond proceeds, and gifts (deferred gifts as well as capital gifts and gifts to current operations). This work is particularly helpful for institutions contemplating a capital campaign.
  • Advising on the retention of a custodian bank. We provide general reports on custodians, but can also provide a customized custody study that recommends a custodian based on the specific needs of an institution.
  • Developing a strategy to handle concentrated stock in a portfolio. We can recommend a hedging strategy or approach to disposition that will help minimize the risk of a concentrated holding. We will also provide an independent evaluation of plans developed by investment banks or brokers.

Diversifying a Large Concentrated Stock Holding for a Family Foundation

For a $700 million family foundation with a $500 million concentrated stock

holding, Cambridge Associates worked closely with the family to analyze the risks of concentrated positions and assess the benefits of diversification. Cambridge Associates began by identifying the family’s long-term goals and then conducted and presented an asset allocation study. The asset allocation study involved extensive research and the creation of risk/return models based on different diversification scenarios to analyze potential implementation options. The foundation has decided to diversify half of its concentrated stock holding into a comprehensive portfolio, having developed a view that doing so will provide adequate volatility management, while allowing ample upside exposure given the continued important role of the single stock even after the sales.

Debt Analysis for a University

For a $1.5 billion university that has worked with Cambridge Associates

since 1991, Cambridge Associates conducted a debt analysis. Although the university had issued debt in the past, a new management team at both the board and staff level sought reassurance that issuing debt was still preferable to drawing down invested cash. Cambridge Associates worked with the university's financial model to determine the size and timing of debt issuance that would continue to maintain healthy operating results and be acceptable to the university's various constituencies. Cambridge Associates assisted further by helping to search for and select a senior managing underwriter.

Custody Search for a University

For a $550 million university that has been a traditional consulting client

since 2002, Cambridge Associates selected a custodian bank suitable for the program’s specific characteristics. Cambridge Associates was responsible for all of the procedural aspects of sending the request for proposal (“RFP”), tabulating the results, checking references, and scheduling on-site visits with various custodians. More specifically, after receiving and analyzing the responses from the RFP, Cambridge Associates prepared a summary comparison of candidates, selected the top two candidates, prepared a list of questions, and conducted on-site interviews with each finalist. Finally, Cambridge Associates helped the university select a new custodian and assisted in negotiating fees.

Financial Equilibrium Study for a Private School

For an $80 million private school seeking advice and financial stability,

Cambridge Associates has been providing traditional consulting services since 2005. In addition, Cambridge Associates undertook a long-range financial planning study, evaluating the role of debt within the school’s overall financial structure. The analysis provided the school with an overview of the likely financial outcome of continuing operations on the current basis, or of adopting alternative plans or policies. As a result, the school was able to identify areas of vulnerability, raise key strategic questions, and chart future growth and financial stability.