Case Study
Institutional Consulting

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Situation: For many years, the institutional consulting industry was built around services for large institutions with billions of dollars and an internal staff to manage day-to-day issues. There was no middle market solution for institutions that had less than $250 million of assets and no investment professionals on staff.

We encountered one such situation nearly 20 years ago, where a small Catholic liberal arts college had a modest endowment, a hard-working but realistic Vice President of Finance, and a Board of Trustees that had the investment acumen but not the time to manage the day-to-day activities of the assets under their care. They were looking for an outside firm not only to handle these tasks but also to help them develop a robust investment program that would supplement the school’s income from tuition and signal to donors that their gifts would be prudently managed.

Solution: Cornerstone has worked closely with the Board, the Investment Committee, and University staff to establish a framework for prudent governance and effective performance monitoring.  The school adopted robust investment policies to guide the endowment and retained Cornerstone as its outsourced chief investment officer. We consolidated assets into a single custody arrangement and now regularly report to the Investment Committee on the combined custody, management, trading, and consulting activities. We implemented advanced performance measurement and risk assessment technology to improve communication and decision-making among all stakeholders. This improved process was made more powerful when combined with ongoing fiduciary education of the Committee and staff members.
Results: Over the past 17 years, the school’s endowment program has grown substantially and has had strong NACUBO (National Association of College and University Business Officers) peer group rankings. In addition, the new structure has improved the transparency and cost of the investment solution. More importantly, there has been turnover at the staff and Board levels with no interruption to the operations of the school’s main source of wealth – its endowment. The policies and monitoring regime implemented, along with ongoing training for the team, allows the school to follow a steady path into the future.

Cornerstone works with the committee when changes are needed to the endowment’s policies; however, day-to-day investment management and support for the finance staff and Board remain Cornerstone’s responsibilities. The school is responsible for governance and the ongoing monitoring of Cornerstone, but they have pushed the responsibility of daily fund management to a prudent expert.