Commonfund helping prep clients for ‘profound’ changes

Managers at Commonfund Asset Management in Wilton, Conn., are predicting "profound" changes for their 1,300 higher education endowment and non-profit clients, most of whom rely on people being able to gather.

Commonfund, which manages a collective $25 billion in assets, provides investment management and OCIO services across the non-profit spectrum, from small schools to large museums.

President and CEO Timothy T. Yates Jr. said he and a staff of 150 "are working dawn to dusk" to meet clients' challenges, which are "very different than the '08 crisis." That is especially true for colleges and universities who "have had to send all the paying customers home. They are asking, 'How do we get through this?' " he said.

Commonfund's twofold approach involves sharing best practices with clients and calling them daily.

Commonfund has been convening experts online to share best practices on topics ranging from debt markets to fundraising during a recession to governance considerations for boards. A recent expert panel covered threats to higher education near term and in the intermediate future. The firm has also arranged client calls with legal experts laying out what the CARES Act could mean for their organizations.

Then there are daily calls with the organizations' investment committees as they try to cope with the crisis. "We are focused on five or six key things, and we are asking really strategic questions" about mission, investment objectives, risk/return and liquidity profiles," Mr. Yates said.

It is a particularly tough conversation with higher education clients, who were already coming off eight years of enrollment declines before the crisis. With room-and-board refunds alone adding up to a 5% drop in revenue, schools need even more funds now to get them through it.

That means a lot of work on schools' spending policies, and revisiting stress tests that in normal times seemed reasonable but are "not creative enough" now, he said. If schools continue with online classes next semester, "there are a lot of ramifications," he said.

Non-profits should reach out to donors and stay engaged, Commonfund advises, as scenarios that once only existed in stress tests are now coming true.

Guiding clients through this crisis also helps investment committees and governing boards recognize their behavioral biases as they figure out next steps.

"Board and committee dynamics are so important," said Mr. Yates, who recommends going through those exercises when times are good.

At this point, he said, "I don't think there is an answer. Our job is to objectively lay out the options and what others are doing."