By Julie Poppen, EDUCATION NEWS COLORADO
The University of Colorado Foundation is shifting management of its endowment and other funds it oversees– or $825 million – to a private financial services firm rather than handling the money in-house.
Yet, in a somewhat unusual arrangement, the same person who formerly managed the assets in-house will still be in charge of the foundation’s assets.
CU officials confirm that alumnus and former CU Foundation Chief Investment Officer Christopher Bittman will continue to manage the foundation’s assets under the umbrella of New York-based Perella Weinberg Partners.
Bittman, in his mid-40s, was recently named a partner of the firm and CIO of its Agility Funds asset management business, based in Austin, Texas. The Agility Funds invest in global equities, fixed income, absolute return strategies, private capital and real return assets, according to a company news release.
“The investment management business is undergoing significant change and I believe many institutional investors are looking for trusted advice and deep experience,” Bittman said in a statement. “The investment solutions offered by the Perella Weinberg Partners Agility business represent an attractive and highly flexible alternative to a broad range of investors.”
College foundations challenge assumptions
Brian Flahaven, director of institutionally related foundations for the Council for Advancement and Support of Education, said university foundations across the country are re-evaluating how they do things in light of staggering losses. Some schools are deciding to bring their operations in-house; others are look outside for a higher level of expertise, he said.
“In general, I think a lot of public colleges and universities do rely on external investment consultants to handle their investments,” Flahaven said. “With what’s happened with the financial markets, a lot of foundation boards are reassessing everything, not only investment strategies but how they’re doing their fundraising, how they’re handling staff.”
“They don’t make decisions about their investments – especially in a time like this – lightly, that’s for sure.”

Decision not without debate
The decision to outsource fund management was not without debate, however. In one interview, Bittman said the foundation’s board of directors discussed the matter for a year before voting in a closed meeting in early July. There was a strong push to add more internal staff. Instead, Bittman and two staffers moved to Perella Weinberg, but they’ll work out of Denver, CU Foundation spokesman Jeremy Simon said.
Simon said the board voted overwhelmingly in support of the shift. The contract stipulates that Bittman manage the CU Foundation’s constituent base as actively as he did when he was on staff. Simon said he could not release the contract signed by the foundation, but said the fees will not exceed what the foundation was previously spending on fund management. He said the foundation will actually gain more expertise and a bigger, more qualified staff to handle important tasks such as conducting due diligence on fund managers.
“The board decided this was the optimal direction to take,” Simon said.
Bittman served as CIO of the CU Foundation beginning in 2004 and remained in the post during a tumultuous time for CU and the foundation as news unfolded of the now notorious football recruiting scandal. A statewide grand jury investigating CU’s athletic recruiting practices in the summer of 2004 also examined the foundation’s spending practices.
No criminal charges were filed against foundation employees or trustees. But the State Legislature – in the scandal’s aftermath – did revise open records laws so that foundations supporting public institutions would have to regularly release information regarding donations without releasing individual donor names.

Bigger foundations keep money in-house
Kathleen Henry, CEO and president of the Colorado State University Foundation, said larger, private schools, such as Harvard and Yale universities, have huge teams of internal investment gurus to manage assets. Smaller schools tend to tap the expertise of outside firms. The CSU Foundation has utilized the services of Monticello Associates for nearly two decades, Henry said.
“We are not of the asset size to make (in-house management) that cost effective,” she said. “What that cut-off is, I’m not sure.”
A year ago, the CSU Foundation’s assets totaled $241 million, but Henry said she’s expecting losses last year to cut that figure by 18.3 percent.
The CU endowment’s value dropped 18 percent over the past year, to $590.1 million. Last spring, full-time foundation staff had to take a required week of vacation, which they could take as paid or unpaid time off, Simon said. Furloughs are being considered in the upcoming year.
Bittman’s star rose early
Bittman, who referred questions about the management shift to a CU Foundation spokesman, graduated from CU in 1985 with a degree in advertising and has served in various volunteer capacities for the university, including as president of the Alumni Association and member of the journalism school’s advisory board.
He began his career on Wall Street as the western regional manager for Merrill Lynch’s Business Financial Services Group, becoming the youngest regional manager in the group’s history.
Before coming becoming the CU Foundation’s first CIO, Bittman was president and CEO of Jurika and Voyles, a California investment firm, where he was responsible for managing more than $5 billion for Fortune 500 corporations, public funds, foundations, endowments and individuals.
His success allowed him to retire at age 40 and, in 2001, buy a 12,000 square foot, 1930s mansion in Orinda called Seven Oaks, once the home of East Bay press lord Dean Lesher and his wife Margaret. The home was listed at $9 million in 2005.
But Bittman said his allegiance to his alma mater and the prospect of helping others brought him out of an early retirement and to CU.

Julie Poppen can be reached at jpoppen@frii.com.
Q & A with CU Foundation spokesman Jeremy Simon
Q. What are the major benefits to this change?
A. The CU Foundation realizes significant benefits to this approach: Materially lower costs than the current small in-house staff model; increased resources to manage the portfolio, as the staff overseeing the assets grows from two to 15 investment professionals; and consistency of investment-management leadership, with the foundation’s CIO for the last five years continuing to manage the portfolio.
Q. Chris Bittman will continue overseeing the investment of CU’s assets, but he will also have a much larger client pool. Will that dilute Bittman’s attention to CU’s assets?
A. Since Bittman will now be supported by a staff of 14 investment professionals in managing the assets, this structure actually offers the foundation significantly deeper resources, and we’re confident that Bittman’s attention to the CU Foundation will not be diluted. Additionally, the assets will continue to be monitored by our Board of Directors and Investment Policy Committee, a committee with six voting members with an average of 36 years of experience each in the investment business.
Q. How does CU Foundation guarantee over the long term, that Bittman continue working personally with the CU Foundation’s assets or that the fees the foundation pays don’t rise beyond what the foundation has paid in the past for fund management?
A. Bittman’s personal involvement and the fee rate (which is below the current and projected costs of the effort) are both contracted for several years.
Q. Who was the main proponent of this switch? And why?
A. There was no single “main proponent” of the change. This was an evolutionary process over an extended period of time, after much analysis of best practices in endowment management. The issue of how to continue to expand resources for the investment effort—while controlling the costs—has been part of an active discussion by the staff, Board of Directors and Investment Policy Committee for over three years. As with any group of fiduciaries, finding ways to increase resources and oversight while managing costs is a continual process.
Q. Why was there so much internal debate about this?
A. “Thoughtful consideration” is a more apt term than “internal debate.” As with any decision made by fiduciaries in an organization’s best interests, there has been significant study, careful consideration and diligence throughout this process. The Board of Directors honored its fiduciary obligations well and had outside counsel guide them throughout the process.
Q. It seems a desire for more intense due diligence is at least part of the equation. Why is there a need for more scrutiny of fund managers?
A. Heightened scrutiny of portfolio investments that are used in the endowment is simply a prudent component of investment management. In an era of increased fraud, it is critical to continue to enhance both the initial due diligence and ongoing monitoring of outside investment managers. As the Foundation’s Chief Investment Officer for the last five years, Bittman and his staff have a distinguished track record of providing excellent oversight and investment performance.
Q. Why don’t other major foundations serving public universities handle their assets this way? Is there a downside? And if there is, have you plugged that hole?
A. A number of other major institutions actually do handle all or a portion of their assets this way – including Stanford, Duke, Middlebury, Smith College, and others. Just a few months ago, DePauw University hired an outsourced firm who had hired DePauw’s CIO. This is a very similar model and one that we expect will continue to be a prudent option.
Q. As you know, transparency has been an issue for all university foundations, including CU’s. Some changes were made in Colorado law to make the foundation a bit more “open.” Will this asset management shift make it harder for people to get information about donations and how those resources are used?
A. This shift doesn’t diminish in any way the significant level of disclosure by the foundation as it relates to investments. You’ll see detailed information on performance, asset allocation, managers used, shareholder responsibility guidelines, etc. on the foundation’s Web site at the link below and will continue to see it going forward. Updated manager information for the fiscal year end will be published in our 2008-09 annual report in the fall, and at the same link: http://www.cufund.org/news/cu-foundation-publications/investment-updates/
Q. Bittman is credited with overseeing CU’s funds during the current recession. The foundation’s funds got hit, but not as badly as most portfolios. How did he do this?
A. The foundation portfolio has held up very well relative to the broad market decline of the last several years. Over the trailing five years, the endowment’s investment performance is up 28 percent cumulatively versus an 11 percent decline in the S&P 500. The endowment has also materially outperformed its benchmark, the broad equity markets and our peers for the trailing year as well. The outperformance is attributable in large measure to seeing the signs early in 2007 of a potential decline and taking specific actions to mitigate that, such as reducing exposure to stocks; cutting emerging markets equity exposure in half; increasing fixed income and cash holdings; and increasing exposure to hedged strategies that would partially offset a decline. Each of these strategies has made an important contribution to investment performance.
Q. New numbers were released this week. What do they show as far as the foundation funds’ losses and gains?
A. The endowment investment performance was down 17.7 percent for the fiscal year ending June 30, 2009. Though a very difficult year, this is materially ahead of our benchmark – down 22.3 percent, the S&P 500 down 26.2 percent. And the press reports we have seen on some of our peers – down 25 to 30 percent. This means that the endowment has outperformed the broad market when it was moving up (from mid-2004 to mid-2007) and when it was moving down (mid-2007 to present). This performance has been achieved with less risk and volatility than the benchmark and S&P 500 over the trailing five years.
Q. Can you list some of Bittman’s activities with CU?
A. Member of the Alumni Association Board of Directors, 1988-1994; president of the Alumni Association, 1993-1994; recipient of CU’s President’s Award, 1994; recipient of CU’s Distinguished Alumni Award, 2000; member of the foundation Board of Directors, 1994-foundation Investment Policy Committee member, 1996-2004; and member of the CU Technology Transfer Office Business Advisory Board, 2006- present.

Distributed by Colorado Capitol Reporters