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FFOGHorn News: October 2017


In this October 2017 Issue, No. 221



FFOG’s Fall 2017 Meeting is right around the corner, have you registered yet? The meeting will be held from October 17th through the 20th at the Omni Parker House Hotel in Boston. The preliminary agenda has been posted to the event page and can be viewed here.

After much positive feedback, the FFOG Meeting App will be utilized again this year. You will be receiving an invitation to download the app by the week prior to the meeting. You will be instructed on how to log in, activate your account, and maneuver through the app. Meeting materials will be available on the FFOG website and on the app and will stay up during and after the meeting.

The theme of the Fall Meeting is "Updating the Endowment Model". FFOG's Investment Though Leader, Larry Siegel, has provided the following summary to get you excited for the Fall 2017 Meeting.

David Salem, founder of TIFF and one of the world’s leading endowment investors, kicks off our Fall 2017 program. Dan DiBartolomeo and Shanta Puchtler look at “quant” strategies, which have become crucial in foundations’ and endowments’ search for alpha.

Dr. Rory Knight provides a global view, consistent with the endowment model’s global focus. Tom Brakke goes back to basics, asking what analysts at active management firms need to know. Diane Mulcahy examines opportunities in private equity, which has become a key source of endowed institutions’ returns, with an eye to whether it will continue to provide superior returns in the future.

The program is rounded out by other speakers including Josh Smith and Stanley Altshuller, who discuss attribution analysis, and Dan Neault, our Thursday lunch speaker, who will talk about artificial intelligence and how it affects investors.

If you haven't done so yet, register now!

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By Amy Hill

Howard Marks’ latest (and lengthy) memo “There They Go Again . . . Again” reminisces about past memos warning (some early and some more timely) of bullish trends gone too far. He parses the current economic environment in terms of high equity valuations, historically low VIX and yields, market infatuation with a select group of stocks, emerging market attractiveness, outsized fundraising for private equity and tech investing, and digital currencies. His conclusions? Read through to the end for his canon of defensive investing.

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FFOG is pleased to have Patrick O'Cull, Principal and Anna Orgera, Partner of Mercer present the results of the FFOG 2017 Compensation Survey in a webinar that will be a repeat of the presentation at the Fall meeting in Boston. This webinar will be held on November 1st at 1:00 PM EDT. This webinar will not be recorded.

To register for the webinar, please click here.

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In this month’s One Day Survey, we have continued the topic of custody and administration for the investment portfolio first addressed in the March 2013 Survey. We present our analysis of responses and a comparison of firms used by our members in both years.

Demographics of foundations responding


Our first question asked if you used a custodian or administrator for your investment portfolio.

For the purposes of this survey, "Custody" or "Custodian" means holding, delivering, and receiving securities and cash, settling trades, processing wires, cash, collateral, and securities movements, or otherwise handling investment assets. "Administration" or "Administrator" refers to accounting, reporting, analytics, and other support relating to the investments and portfolio.

Of the 72 foundations responding to this question, 63 or 88% used a custodian or administrator. As expected, the percentage of foundations responding yes increased as the asset size rose. While only 2/3 of foundations with under $250 million in assets used a custodian or administrator, all foundations with assets over $1 billion did.


Next we asked which firm your foundation used and compared the results to the 2013 responses. We received 60 responses to this question. There was no material difference between the breakdown from 2013 to 2017. Northern Trust remained the #1 firm used with slightly over 50% of foundations reporting using them in both 2017 and 2013. In 2nd and 3rd place were BNY Mellon and State Street with 24% and 7% respectively in both years, followed by Wells Fargo, U.S. Bank, and J.P. Morgan, with about 5% each. Other, smaller firms made up 10% in 2013 but only 3% in 2017.


When looking at the results by asset size, we leave the reader to speculate on the cause, but we do note that for the 60 foundations responding, Northern Trust’s proportionate share increases as foundation asset size increases, while BNY Mellon’s sweet spot is mid-size foundations, and State Street has none in that size group.


The next question asked whether you used more than one custodian. 11 respondents, or 18% out of the 61 responding, did use more than one custodian for their investment portfolio. Only 17 foundations answered that they split custody and administration responsibilities. For these foundations, about half used an external firm or consultant for administration and half used internal staff.

We then asked to list the functions you utilized and mark who provided these services. We received 59 complete responses. While most of the functions were almost universally utilized (whether through an external firm or internal staff), only 30% of foundations used securities lending, and 78% needed foreign exchange services. We noted no obvious differences between foundations in various asset size groups other than for foreign exchange, where 100% of foundations over $2 billion required these services while only half to three quarters of smaller foundations did.


We noticed a pattern that was relatively consistent across all foundation asset sizes. For liquidity forecasting, commitment tracking, and accounting / general ledger support, about 75% of foundations performed these functions internally. While for performance calculations and reporting / analytics, the function was outsourced to external firms or consultants for over 80% of respondents.


Moving on to the next theme of this survey, we asked how your foundation treats reporting for alternative investment funds that deliver statements on a lagged basis. For the 58 complete responses we received to this question, 30 foundations, or just over half reported that they reported these lagged statements in the period received, whereby the current period results actually reflect investment performance from a prior period for the relevant investments. Seventeen (30%) reported that they keep the books open and add the statements to the actual period to which they apply, while 11, or 20% utilized some hybrid method. Generally this was reported as somewhere between manually calculating prior period returns and reporting summary data, to maintaining two sets of books, one for the accounting close and one for performance reporting.

The breakdown of reporting types was relatively consistent across all foundation asset sizes.


Finally, given that our year-end results and portfolio values will be included in audited financial statements, we asked if and how your year-end process for reporting-lagged results differs from a standard month-end. Of the 40 responses to this question, a quarter either had no difference in the year-end process, another 25% kept the books open longer (for an unspecified period of time), 45% kept the year-end books open until substantially all funds had reported, while 2 foundations reported that the process would vary year to year based on factors such as performance and market volatility.


When viewing the results by foundation asset size, for all but the smallest foundations, about half kept the books open until substantially all funds have reported. While 20% to 30% of foundations under $1 billion reported no difference in their year-end process, only 10% to 15% of the largest foundations reported as such.


For the full survey results, please click here.

As always, we appreciate your responses and participation and hope this survey has been enlightening. Suggestions, comments, and criticisms are always welcome, as are suggestions for future One Day or Ad-Hoc surveys.

The Research Committee and One-Day Survey Team would like to welcome our newest member, Krysten Curtis of the College Futures Foundation. We appreciate your willingness to join the team and commitment of time and effort!


Thanks to those that participated in the survey this month.

Please contact Bob Bailey (, Saul Bakst (, or Tim Otto ( for feedback and/or suggestions for future survey topics.

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FFOG’s Research Committee is pleased to launch the new FFOG Buyers’ Guide. This resource complements the three major surveys. The Buyers' Guide contains information about vendors, services, and products used by FFOG members. It is similar to the lists of investment managers from the investment survey, but it also includes more specific information about vendors.

The Buyers’ Guide puts the answer to “Who/what do you use for _____?” at your fingertips. The information contained in the Buyers’ Guide is available to all members; you don’t have to participate to use it. Of course, as with all FFOG surveys, the more participation we have, the more useful the resource will be.

To get started, go to A User's Manual will guide you through the key features: browse the vendor list, add/edit vendors and contacts, and search for vendors used by your fellow FFOG members. An Excel template is available to help you submit multiple vendors and contacts. Simply fill in the worksheet, and then send to for upload.

Many thanks to Amy Snyder of the Connelly Foundation, who has served as the volunteer chair of the Buyers’ Guide project. If you have any feedback about the Buyers’ Guide, please contact the FFOG Office at or 856-423-3156.

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Collaborate Hot Topics

Parking Benefit: Susan Dorsey, VP of Finance and Administration of Gates Family Foundation, inquired regarding parking and transportation benefits for employees, including any incentives to prioritize public transportation and other means over driving and parking solo. Twelve responses were received; benefits reported included free parking, transit passes, and $3 daily incentive nor non-driving commutes. A reminder was posted that the 2017 FFOG Compensation Survey had 184 responses to a question whether parking was provided for executives only or all employees.

Matching Gift Minimum: Deirdre Hamill, Director of Finance and Administration of The Harry Frank Guggenheim Foundation, inquired regarding matching gift minimums and the logic behind them. Twenty-two responses were received. Minimum amounts mentioned included $0, $25, $50, $100, and $250 with $25 being the most common. Further details were given in many responses, including match ratios, total matching budgets per employees and directors, and details regarding a matching program for volunteer hours.

Manager Firing/Hiring Decisions: Janice Bratton, VP & Investment Officer of Milton Hershey School Trust, asked who makes hiring and termination decisions over public market managers. Eighteen responses were received, with Finance or Investment Committees being the most common response. Staff, consultant, CIO, and CEO input (and, in some cases, authority for the decision) were also mentioned. Additionally, organizations with OCIOs mentioned that those individuals/entities make the hire/termination decisions, some with Finance or Investment Committee approval and some independently.

Are you receiving Collaborate posts? If you are noticing a drop in activity, it may be possible that your email has begun blocking Collaborate. Make sure to check your junk email box or contact the FFOG administrative office at You can also check your Collaborate email settings in the Notification Settings tab of your member profile.

Remember, reply to posts whenever possible! Your opinion matters!

New FFOG Members

Regular Members

Catherine Jessup,
Chief Financial Officer
The Leona M. and Harry B. Helmsley Charitable Trust

Patrick McGovern,
Chief Investment Officer
McGovern Foundation

Marilyn Payne,
Chief Financial Officer
Cotsen Foundation for the Art of Teaching

Affiliate Members

Kristen Batcho,
Accounting & Finance Manager
Daniels Fund

John DeSisto,
Chief Investment Officer
Yawkey Foundations

Rivelian Rivai,
Senior Accountant
The James Irvine Foundation

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"Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”

Sir John Templeton

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 Foundation Financial Officers Group (FFOG) • • 856-423-3156

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