What’s worth doing is worth doing for money. — Gordon Gekko (Michael Douglas) Wall Street

What do investment professionals earn at nonprofit institutions? We recruit these executives for a living, so we avidly track their pay and performance.

In this letter we highlight the compensation of one-hundred twenty-eight chief investment officers and staff at private US foundations and tie their pay to five-year performance.

Our goal is to give boards, CEOs, and CIOs a useful set of benchmarks as they consider what to pay their investment executives.

FoundationMark

As always, when it comes to foundation research we draw on the impressive data set from our good friend John Seitz, CEO of FoundationMark.

We think his research and rankings are excellent companions to our pay and performance studies, of interest to asset owners and all purveyors of investment products and services.

The Business of Philanthropy

While college endowments garner most of the media attention, foundations embrace a much larger market, both in numbers and assets.

Over the last thirty years the number of foundations has tripled from about 40,000 in 1995 with assets of $373.4 billion to nearly 120,000 holding $1.6 trillion today. One report puts total nonprofit assets at over $8 trillion dollars.

By comparison, the 2024 NACUBO-Commonfund Study of Endowments lists 658 U.S. colleges and universities and affiliated foundations with $873.7 billion in assets.

Nonprofits are major employers in almost every state. Did you know that:

• The nonprofit workforce is 12.5 million strong, making it the third largest “industry” in the U.S., outdistancing all but two major for-profit industries in its contribution to state employment and payrolls.
• Nonprofit employment is dynamic, growing more rapidly over time than overall employment.
• Nonprofit wages actually exceed for-profit wages in many of the fields where both sectors operate.

(How does foundation pay compare to Wall Street money, you ask? These Heidrick & Struggles comp surveys on alternative asset managers and private equity professionals suggest it’s a toss-up.)

Performance

Unlike academia with its traditions of open access and publish-or-perish, foundations have no impetus to reveal or publish much of anything, particularly investment data, and few do, less than .01%.

As Professors Matteo Binfare and Kyle Zimmerschied found while drafting a paper on foundation investing: “There is little research to date on the investment performance of private foundations.”

Undaunted, Mr. Seitz and staff have developed a system which tracks and estimates the investment performance of most foundations in the nonprofit universe. But please keep in mind that these numbers are estimates based on 990 data, not public pronouncements from the foundations.

Moreover, there’s a long lag – a year and a half to two years – before compensation data is publicly available. Hence, the comp numbers in our table are mostly as of December 31, 2023, with a handful from March and June 2024.

Pass the gravy

Charity often comes down to semantics.

Large private foundations pay their employees well, and for the most part they provide substantial public benefits. The more foundations earn, the more they give away. That’s how the system is supposed to work.

But there are exceptions. We wrote about one case a while back of too much charity staying at home. And Professors Nathan Born and Adam Looney assert in “How Much Do Tax-exempt Organizations Benefit From Tax Exemption?” (pg.8) that a few nonprofit beneficiaries seem reluctant to share their tax-free bounty.

The OCIO Option

The OCIO industry has grown dramatically over the last forty years for good reason, managing institutional money is expensive. It takes time and resources to build a competitive, institutional-grade investment office, and staff compensation alone can run seventy-five to eighty-five percent of total costs.  

The top three foundations in our table, for example, disclose investment staff comp of $13,438,547 for the Hewlett, $12,400,949 for the Ford, and $11,133,746 for the Moore, but that’s only for the highest paid employees. The actual investment office headcount and payroll is often much larger.

OCIOs such as Hirtle Callaghan, Blackrock, Brown Brothers Harriman, McMorgan & Company, Third Lake Partners, et al, have spent decades building their platforms and working with organizations and families with like-minded missions, objectives, and challenges.

These full-discretion investment managers offer the proven performance of in-house investment staffs and the process and structure to cope with operational and regulatory headaches, all at a reasonable price.

For most nonprofits under $1 billion AUM, and for many with more, outsourcing is the better choice.

Pay and Performance at Private Foundations

Highest Paid Investment Staff Members

(Pay and Performance – Table)

When the winds of change blow, some people build walls and others build windmills ― Chinese proverb

There’s a lot of money to manage in this world, about $471 trillion US dollars according to the latest UBS Global Wealth Report 2025, and well over a third – $175 trillion – sits right here in our own back yard.

Last year Henley Global’s World’s Wealthiest Cities Report 2024 broke down US wealth distribution by individuals and location:

(chart)

All this wealth should be good news for investment outsourcers as nonprofits and the nouveau wealthy look to offload their investment headaches.  But deep-pocket competition and advances in knowledge-based technologies are changing the game.  It’s no time for complacency.

Bots and bolts

Not long after we published our latest OCIO directory, I got a call from the president of a large west coast foundation, unhappy with their OCIO provider’s performance and especially unhappy with the service.

The president explained that they might have stomached the last few years of mediocre returns if communication were timely and forthright, but apparently service was half-hearted and the board had had enough.  They are reviewing alternatives.

In the good old days – before TikTok and cat videos – sales, service, and steady returns were the nuts-and-bolts of money management.  When Hirtle Callaghan, Commonfund, McMorgan & Company, and Strategic Investment Group hung their shingles the outsourced chief investment officer concept was fresh and intriguing. Still a tough sell, but the field was wide open.

Twenty years ago, when the Princeton Theological Seminary asked me for OCIO referrals I sent the school eight names.  Today there are one hundred-eleven firms on our list, and chatbots, robo-advisors, Zoom, and cloud-based access are essential parts of the full-service landscape.

Baby boomers and Gen-Xers still crowd the boardrooms and family seats and most still prefer the human touch, but how and with whom will the next-gens invest?

Digital natives, those born in the internet age – Millennials (1980–1995), Gen Z (1995–2010), and Gen Alpha (2010 – present) – grew up with tech.  As long as their assets are globally accessible, secure, and returns pay the bills they don’t seem to care much about human contact.

So, will AI replace human empathy and intuition as Mr. Zuckerberg envisions?  Will “Her” soon be our most trusted companion?  If so, who or what will manage our money?

Digital shadows

“Most wealth managers say they want more clients.  But too often, they wait for them to show up” notes the Boston Consulting Group.  But, says BCG, there are powerful tools on the horizon to support business development.

GenAI-powered prospecting engines using external data can identify and profile business owners, expats, and high-income professionals and track digital indicators that suggest investable wealth, such as business sale filings, job changes, bursts of luxury travel reviews, and niche signals like luxury car forums.

“The engine doesn’t just find names, it prioritizes them.  An internal scoring system ranks each lead by value and likelihood to convert.  High potential prospects can be routed directly to the most suitable advisors, complete with customized outreach packs.  Every interaction – open rates, meeting conversions, follow-ups – is tracked and fed back into the model, so it gets smarter over time.”

Noah Smith, in his piece “The dawn of the posthuman age” writes:

“When I was a child, sometimes I felt bored; now I never do.  Sometimes I felt lonely; now, if I ever do, it’s not for lack of company.  Social media has wiped away those experiences, by putting me in constant contact with the whole vast sea of humanity.  I can watch people on YouTube or TikTok, talk to my friends in chat groups or video calls, and argue with strangers on X and Substack.  I am constantly swimming in a sea of digitized human presences.  We all are.”

Final thoughts

I never wanted this for you. We just ran out of time, Vito Corleone ― The Godfather

Our spring 2025 Outsourced Chief Investment Officer (OCIO) directory update features one-hundred-eleven service providers with pertinent particulars on each. We include names, numbers, emails, and titles of business executives at each firm ready to take your call.

Our goal is to help families and institutions locate, review, and connect with full-service discretionary outsource investment managers. Our directory makes it easy for prospective clients to reach them. No ads, no paywall, no charge.

Time and Money

Time is a beguiling thing. “The relative progression of existence” posited Einstein. “Mostly a human affair” adds theoretical physicist John Kitching. But for the rest of us, aging is more akin to Hemingway’s famous line, “How did you go bankrupt? Two ways. Gradually, then suddenly.”

Succession, like the passage of time, is something most families and institutions are aware of, but surprisingly few do much about it.

To be fair, sometimes age and events disrupt the best laid plans. A few weeks ago, I met with a notable, highly successful founder and entrepreneur who wished to discuss recruiting a new family office head. Due to this individual’s distinctive longevity, past occupants in the position are no longer with us.

This patriarch is still sharp as a tack and busy juggling ideas and opportunities, but time is short, there’s much to do, and the odds of replacing a time-tested veteran with a like-minded newbie and bringing this fresh hire up to speed in months, not years, are growing longer by the day.

Planning ahead

In the OCIO business it takes years to establish a presence, polish services, and build a solid investment record. Few firms manage the task. Even fewer adapt, revitalize, and deliver across generations.

Recent years have seen a steady stream of outsourcing hopefuls merge with better-resourced patrons as founders age out and cash in. Recent capitulants include Hall Capital, NEPC, Agility, Truvvo, Ellwood Associates, New Providence, CornerStone, PFM, and Permit Capital.

But now and then a firm manages the transition. Hirtle Callaghan, a pioneering OCIO serving philanthropic families and mission-driven nonprofits, opened for business thirty-seven years ago and recently finished fine-tuning their plans for the next fifty years.

Jon Hirtle remains Executive Chairman and works full-time, but the firm has transitioned to a distributed leadership structure with firm-wide support to provide stability and continuity. A three-member management committee now leads the firm, buttressed by ten managing directors and thirty directors.

While controlling interest remains within the Hirtle family – two generations of family members currently in leadership positions – the firm continues to parse out equity and mentor next-gen talent.

There were a few twists and turns along the way, but clients are pleased and the future looks bright.

The sunny side

It turns out, when time flies by, we’re usually having fun. That’s according to a University of Nevada, Las Vegas report.

“We tell time in our own experience by things we do, things that happen to us,” said James Hyman, a UNLV associate professor of psychology and the study’s senior author. “When we’re still and we’re bored, time goes very slowly because we’re not doing anything or nothing is happening.

On the contrary, when a lot of events happen, each one of those activities is advancing our brains forward. And if this is how our brains objectively tell time, then the more that we do and the more that happens to us, the faster time goes.”

In other words, we can choose between a seemingly short but fruitful life, or one long boring slog. Me, I think I’ll fruitfully keep on recruiting.

― Charles Skorina

(download OCIO Directory only as PDF)

Activity is the enemy of investment returns —Warren Buffett

Endowment board members tell us their schools must earn at least eight percent on average to support operations and administration, student aid, and capital conservation. Unfortunately, that’s a tough nut to crack based on recent performance.

Only forty-two of the one-hundred-nineteen funds over one billion AUM in our latest FY2024 endowment performance report achieved eight percent or more over the most recent ten-year period. Roughly one third. The average return for the entire group was seven-point-seven percent.

Even worse, just one of twenty-two endowments between five hundred million and one billion in our report beat the eight percent hurdle. Sadly, those are usually the ones that most need the income.

NACUBO-Commonfund will publish their annual report in a few weeks and we will see how their endowment universe performed. But for FY 2023 NACUBO reported an average return of seven-point-seven percent net of fees for all participating schools. Not much has changed.

The NACUBO chart below shows the volatility of 10-yr returns year by year from 2002.

Here’s the problem: over the last three decades most large endowments have tried to mimic the “Yale model.” But there was only one David Swensen, and he was an outlier, a different thinker, a trailblazer and his first book was called Pioneering Portfolio Management for good reason. It was all new stuff. Forget public markets. Spend your time uncovering private opportunities with less visibility and more upside. And get in early.

The School of Swensen produced many top-flight acolytes, but the master is gone and the world has changed. Today that trail he cut through the wilderness has become a freeway and the endowment model is a very crowded trade. Let’s let Mr. Swensen explain the conundrum.

I figured out when I revised Pioneering Portfolio Management that the most important distinction isn’t between the institutional investor and the individual. It’s between those that are set up to make high-quality active management decisions and those that aren’t.

The investment management world is a strange place in that the right solution is not in the middle. The right solution is at one extreme or the other. One end of the spectrum is being intensively active. The other is being completely passive.

If you end up in the middle, which is where almost everybody is, you pay way too much in fees and end up getting subpar returns . . . The passive group is not nearly as big as it should be. Almost everybody should be there.

First level thinking

Leadership is the capacity to translate vision into reality —Warren Bennis

Chief investment officers are C-suite executives. They manage a business that generates revenue and supports an enterprise. Be it OCIO, endowment, or family office, investment leadership matters.

We recruit these executives and facilitate OCIO selections so we pay attention to who they are, what they do, and how well they do it. Here are a few observations.

Larry Fink, CEO of BlackRock, describes leadership as “a consistent voice, a clear purpose, a coherent strategy, and a long-term view.” McKinsey defines leadership as “enabling others to accomplish something they couldn’t do on their own.” Jon Hirtle, executive chairman Hirtle Callaghan and former Marine Corps officer, considers leadership “the noble cause – serving the client.”

The authors of “What Makes a Great Leader,” list three qualities as key – architects, bridgers, and catalysts. “As architects, they build the culture and capabilities for co-creation. As bridgers, they curate and enable networks of talent inside and outside their organizations to co-create. And as catalysts, they lead beyond their organizational boundaries to energize and activate co-creation across entire ecosystems.”

Myra Drucker’s prolific CIO academy

Some years ago we spoke with Myra Drucker, the former chief investment officer of the Xerox corporate pension group, and wrote about her impressive internal CIO training program.

Notable alumni include Joseph Boateng, CIO of Casey Family Programs Foundation, MaDoe Htun, CIO of the William Penn Foundation, former endowment CIO’s Mary Cahill and Matthew Wright of Emory and Vanderbilt respectively (and founders of OCIO firms Acansas and Disciplina).

Mr. Boateng recalled that “Myra told all of us in the investment office that she would consider her job a success if she accomplished just two objectives: first, meet her performance targets for the pension fund; and second, develop all of us so well that each of us could go on to become a CIO. She is a role model I still look up to.”

When we asked Ms. Drucker for the secret to her CIO sauce, she answered this way: “First, obviously, you hire the best people you can find. Every hiring decision should be a big deal that gets your full attention.

“Then, push them. Make them stretch and take on new assignments. I rotated my people among asset classes. Nobody just sits at a fixed-income desk without ever having to deal with equities or alternatives. For every asset class and major initiative, I made sure there were two team-members assigned: a lead and a back-up.

“But it goes beyond just portfolio management. Everybody is exposed to the operational and administrative tasks. Everybody has to understand fund accounting.

“I know that some fund managers think they should be the sole interface with the board or trustees, and reserve that job to themselves. I think that’s a mistake. I made sure my people were in meetings with the board members and made presentations to them. “Managing” a board is a key, make-or-break skill for a fund manager, but if you’re not taught how to do it, how can you ever operate on that level?”

Time and money