Cornerstone Partners

11 Pages Posted: 30 May 2017

See all articles by Richard B. Evans

Richard B. Evans

University of Virginia - Darden School of Business

Prakash Menon

University of Virginia - Darden School of Business

Abstract

Lumina, a foundation focused on increasing both access to and success in higher education for U.S. students, is dealing with the recent resignation of its chief investment officer. The CFO reviews the structure the firm has in place to manage its $1.1 billion endowment. Although the CFO and other finance and administration professionals at Lumina are temporarily overseeing the endowment, he recognizes that many other foundations outsourced this responsibility to investment advisory firms. As part of his review, he invited a number of firms—including CornerStone Partners, from Charlottesville, VA—to make presentations to the Lumina management team. While each firm claims the ability to outperform its benchmark, Maas wonders exactly how the outsourcing would add value, and how this outperformance could be quantified.

Excerpt

UVA-F-1677

Rev. Dec. 4, 2012

CORNERSTONE PARTNERS

As J. David Maas drove home from his office in downtown Indianapolis, he thought about the presentation he had seen earlier in the day from Kevin Schuyler and his colleagues at CornerStone Partners. Maas was the CFO for Lumina, a foundation focused on increasing both access to and success in higher education for U.S. students. Before joining Lumina in 2000, Maas had spent 14 years with the student loan services company USA Group eventually as a senior vice president and treasurer. With over 30 years of experience in financing student loans, Maas recognized the increasing importance society placed on higher education and the increasing difficulty students encountered in accessing these educational opportunities. He joined Lumina, in part, because he thought the foundation was well positioned to help policy makers in their efforts to increase both access to and the completion rate of degrees in higher education.

With the recent resignation of Lumina's chief investment officer, Maas was reviewing the structure the firm had in place to manage its $ 1.1 billion endowment. Although Maas and other finance and administration professionals at Lumina were temporarily overseeing the endowment, he recognized that many other foundations outsourced this responsibility to investment advisory firms. As part of his review, he had invited a number of firms—including CornerStone Partners, from Charlottesville, VA,—to make presentations to the Lumina management team. While each firm claimed the ability to outperform its benchmark, Maas wondered exactly how outsourcing the CIO function would add value, and how this outperformance could be quantified.

History of the Outsourced CIO Model

. . .

Keywords: endowments, outsourcing to investment advisory firms, investment portfolio statement

Suggested Citation

Evans, Richard B. and Menon, Prakash, Cornerstone Partners. Darden Case No. UVA-F-1677. Available at SSRN: https://ssrn.com/abstract=2974495

Richard B. Evans (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4030 (Phone)
434-243-7680 (Fax)

HOME PAGE: http://faculty.darden.virginia.edu/evansr/

Prakash Menon

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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