American Red Cross Reverses Course, Revokes Investment Control From Cambridge Associates

The American Red Cross has ended its outsourcing arrangement with Cambridge Associates a little more than two years into that relationship, according to a person close to the situation.

In June 2018, the philanthropy announced a “strategic decision” to give day-to-day investment decisions for its endowment and pension fund over to the outside firm. That led to disbanding its internal investment team, or what remained following its split with chief investment officer Greg Williamson. 

[II Deep Dive: American Red Cross Outsources Investments to Cambridge Associates]

The American Red Cross is still a paying client of Cambridge Associates, a person familiar with the situation told Institutional Investor, suggesting a strategy reversal rather than a major rift between the organizations. Cambridge continues to advise on the portfolios, but has lost discretion over what asset managers to hire and where to move assets. 

“The firm is committed to helping clients achieve their investment goals, which includes accommodating them as their investment needs and governance structures evolve,” this person said. 

There are two obvious courses of action for the American Red Cross: replacing Cambridge with another outsourced-CIO outfit, or rebuilding an internal investment team. 

The multibillion-dollar organization already departed from norms by opting to outsource in the first place. Typically, pension funds, endowments, and foundations find that internal staff are more cost effective once portfolios surpass the $1 billion mark, if less simple than paying an outside firm for the services.

The nonprofit did not respond to a request for comment on the move and its plans for the assets by time of publication.