Jewish Endowment Moves Money Management Outside

The Jewish Federation of Metropolitan Chicago, a nonprofit that provides humanitarian services, is splitting with its chief investment officer and will soon outsource the $1 billion endowment’s asset management, according to a letter to investors obtained by Institutional Investor.

The Jewish United Fund oversees a pool consisting of its own assets and money from other nonprofits, all notified in a Nov. 16 letter from JFMC that Edgehill Endowment Partners will begin investing for the charity in January. JFMC chairman Michael Zaransky and executives said in the letter that the fund’s costs should remain “generally consistent” with Edgehill in place, and their interests will be strongly aligned through an “incentive-based component” of their agreement.

Edgehill, based in New Haven, Connecticut, was founded in 2013 by Ellen Shuman and Nina Scherago, both of whom previously worked at high-profile U.S. nonprofits. Shuman is a David Swensen protégé from Yale University’s endowment and ex-CIO of the Carnegie Corp. Scherago was deputy CIO of The Investment Fund for Foundations, known as TIFF, and spent a decade with the Howard Hughes Medical Institute, according to the letter.

The letter says Edgehill won the mandate after JFMC and its consultant Kidderbrook Group spoke with all the outsourced-CIO firm’s clients as part of their “extensive” due diligence. The new arrangement has created a leadership shakeup at JFMC, including the upcoming departure of longtime in-house CIO David Brief, and his team members Alan Polansky and Brandon Pevnick.

“To say the least, it’s a somewhat unconventional decision to advocate winding down the investment office that I established 15 years ago,” Brief said, when asked about the decision to outsource the fund’s asset management. Brief said he had recommended the move, and that he’s now evaluating opportunities to continue working alongside Polansky and Pevnick in an outsourced-CIO role.

“Having built the equivalent of an OCIO business under a non-profit umbrella, it’s certainly bittersweet to be overseeing the transition to a third-party,” he said. “But it’s the right decision at the right time.”

Brief, Polansky and Pevnick are in “advanced discussions with various firms that will enable us to continue working together to provide OCIO-type solutions for smaller and mid-sized Jewish federations, foundations, and charities,” Brief said. The trio also plan to provide institutional and individual investors access to investment opportunities in Israel, he said.

In the meantime, all three have agreed to remain in their current roles through the end of a transition process that’s expected to be completed at the end of the year, according to Brief.

[II Deep Dive: Ellen Shulman, Lifetime Achievement Award]

“We are honored to serve the JUF and Jewish Federation of Metropolitan Chicago in fulfilling its mission,” Scherago said in reply to an email seeking comment on Edgehill’s new client. “Ellen and I will bring to the service of the Federation the expertise that we each developed over 25 years managing portfolios and working directly for large endowments and foundations,” she said.

The fee structure that JFMC negotiated with Edgehill should keep the endowment’s cost ratio at historical levels of around 35 basis points, according to the letter.

As part of the leadership shakeup at JFMC, Edgehill’s primary contact will be controller Peter Chiswick, who will fill the newly created role of director of the investment department, the executives said in the letter. JFMC’s investment office manager, Tracy Van Giesen, will take on a new position helping Chiswick to engage with its new OCIO and investors in the charity’s fund.