Our November letter looks at one of the country’s biggest and most effective operating foundations – the $2.5 billion AUM Casey Family Programs (CFP) in Seattle – and Joseph Boateng, the man who manages the money.
An “operating” foundation uses most of its resources to run its own, internally-managed charitable programs. Among the 86,000 foundations in the U.S. totaling $715 billion in assets, almost all are grant-makers. Only 5 percent run their own charities as CFP does. This has implications, as we shall see, for their investment program.
In 1907, 19-year-old Jim Casey and his 18-year-old pal Claude Ryan between them had one bicycle and $100 borrowed from a friend. They set up the American Messenger Company, operating out of a hotel basement in Seattle. The automobile was still a novelty and aviation barely existed. His brother George and a few friends worked as messengers.
The tiny bike-messenger company grew into mighty UPS, with an enterprise value of over $100 billion and which now moves its packages on its own aerial fleet (UPS Airlines), flying hundreds of giant jet freighters all over the globe. Not to mention 96,000 trucks, vans, tractors and even motorcycles. Alas, no bikes.
When Mr. Casey died in 1983 he’d turned his borrowed $100 into a personal fortune of $100 million. Most of that went into the CFP operating foundation and the related grant maker Annie E. Casey Foundation. The former is still sited in Seattle, while the latter – also focused on child welfare – is in Baltimore.
For any of our readers who lives have been touched by foster care, you know Casey.
President and CEO William C. Bell, Ph.D., a former New York City commissioner for Child Services, joined CFP in 2004 and became CEO in 2006. A year later the Casey Board recruited Joseph Boateng to work with Dr. Bell as the foundation’s first and only CIO, bringing the investment portfolio inhouse. It had been previously managed externally by Russell Investments.
CFP’s charities, despite their altruistic aims, have budgets, expenses, and many commitments to meet, like any big business. But revenue comes through a single pipe: investment returns on Jim Casey’s original endowment.
For CFP, any unexpected shortfall in investment revenue means either a cut in programs for kids, or an invasion of the corpus. Both are unacceptable.
For fourteen years, Mr. Boateng has managed to produce that steady income while walking an investment tightrope.
Kim Lew, the new CIO of Columbia University, previously managed investments at the Carnegie Corporation, another major private foundation. As she told us in our recent interview:
A private foundation is not a university endowment. We don’t have rich alumni we can go to for help if we take an unexpected haircut. We have constraints which demand close attention to liquidity. That means we can’t lay out sixty to seventy percent of the portfolio in private equity, venture capital, timber, and other assets which might take years to sell.
Joseph Boateng, an American Success Story
Mr. Boateng was born in the west African republic of Ghana, son of a prominent local leader.
There were early signs of his business acumen. During his student leader days at the University of Ghana, Joseph launched a number of innovative programs for small business owners including education sessions and seminars on accounting, business development, and cash management.
AIESEC International even gave him an award for the most Innovative Program of the Year Award at their Annual International Congress in Innsbruck Austria in 1987.Read More »