1. A s p e c i a l r e p r i n t f r o m V o l u m e 4 , I s s u e 2 Fa l l 2 0 0 9
What grant has impressed you the most?
The most memorable grants for me were the
environment grants—land use and transportation
reform to rein in sprawl and promote sustainable
CLIENT PROFILE: Surdna
urbanism, sustainable forestry to protect terrestrial
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biodiversity, and fisheries management reform
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to protect marine biodiversity have been some of
my favorites. I believe Surdna has informed and
enhanced federal, state, and local policies on trans-
portation, fisheries, ocean conservation, and energy.
The Surdna Special Forestry Initiative focused Century-Old Foundation
on land the family owned in northern California
and promoted market-based reform—certification
of wood and forest products as a way to drive U.S.
Still Supporting Good Works
domestic forestry management toward sustainable
growing and harvesting practices that protected
Interview with Marc de Venoge
large ecosystems. Today, thanks to our and other By John Maden
foundation partners’ efforts, you can buy certified
sustainable wood products at big box stores,
and millions of acres of forests are managed in
a sustainable best-practices manner for future
generations to enjoy.
How did you get to Surdna?
I came to Surdna almost 19 years ago
in October 1990 as the first CFO, joining
the foundation’s first professional execu-
tive director, Edward Skloot.
My old firm audited Surdna, which was
one of my nonprofit accounts. I wanted
a feeling of purpose and connection
to a meaningful mission, and Surdna
provided that. The more efficient
Surdna’s operations and the better
the performance of the organization’s
C A MBRI D GE ASSO CI AT E S L L C investments, the more dollars available
for environmental and community
revitalization-related grant making.
AR L ING T ON Cambridge Associates is a privately held, independent consulting firm that provides investment
703.526.8500 consulting and advisory services. We strive to help global institutional investors and private clients Surdna was like a start-up operation
BOS T ON meet or exceed their investment objectives by providing proactive, unbiased advice grounded in in 1989, despite its 1917 establishment.
617.457.7500 intensive and independent research. We revamped management by creating
D AL L AS Widely recognized as a leading investment consulting firm, we place a special emphasis on avoiding new grant guidelines and establishing
214.468.2800 conflicts of interest and maintaining complete independence from money management firms. internal operations controls. The
Our non-marketable alternative assets benchmarks, Cambridge Associates U.S. Venture Capital Index® treasurer, Frederick F. Moon, III, and Surdna’s Chairman Emeritus, John E. Andrus, III, shown
L ONDON
44 (0) 20 7592 2200 and Cambridge Associates U.S. Private Equity Index®, are published in Barron’s and are widely Cambridge Associates consultant Matt with CFO Marc de Venoge, celebrated his 100th birthday in
Lincoln, who remains our consultant, September at the Woodhill Country Club, Wayzata, Minn.
considered to be the industry-standard benchmark statistics for these asset classes.
ME NL O PAR K reformulated the concept of managing
650.854.8400 Founded 35 years ago, we serve an international clientele from offices in Arlington, Virginia; Boston, the organization.
S ING APOR E Massachusetts; Dallas, Texas; London, England; Menlo Park, California; Singapore; and Sydney, Australia.
65.6224.8688
www.cambridgeassociates.com
S YDNE Y
61.2.9229.6500

2. The concept of professionalizing Surdna, which John was known for his modesty, work ethic, How did Surdna diversify into venture
is the founding family’s name spelled backwards, and entrepreneurial spirit. He rode the New York capital and other alternative asset classes?
came from the board and John E. Andrus, III. City subway to work and was called the “multi-
We moved into hedge funds, foreign developed
John turned 100 years old in September 2009 millionaire straphanger.” He didn’t live an extra-
markets equities, and emerging markets early in
and is the foundation’s chairman emeritus. He vagant life and never drove a car. His frugality was
the 1990s. We were a bit slow into private equity
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still calls me occasionally with a comment or legendary, and his main interest was his family.
and venture capital and started down that road
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cLient PrOFiLe: surdna
two on investments and jokingly asks, “Is
My favorite anecdote about John Andrus is the with funds of funds. By 2006, the IC had
Surdna still solvent?”
time he was doing chores for a farmer during recognized the specialization in the markets
his college spring break. The farmer’s flock of and felt the need for the external CIO model of
How did the organization start? endowment investing. We opted for outsourcing
sheep had been killed by dogs the previous winter.
The founder was John Andrus, Sr., a turn-of-the- When Andrus saw the decomposing carcasses, with the Cambridge Advisory Service model.
century industrialist-entrepreneur and philan- he thought of the high demand for wool to make
thropist. His first philanthropic venture was an Since 2006, we’ve hired maybe 20 new managers.
uniforms and blankets for troops during the
orphanage in Yonkers, N.Y., dedicated to the We’ve diversified manager risk and expanded
Civil War. He offered to pluck the wool from the
memory of his wife, Julia Dyckman Andrus. into direct investments with private equity and
dead sheep and ended up selling it for $1,200.
The Julia Dyckman Andrus Memorial has since venture funds and moved away from funds of
been converted to a residential treatment facility funds. We can already see that our significant
Why was Surdna like a start-up move into hedge funds was a big help in 2008
for emotionally troubled children. operation in 1989? on a relative basis, as the group of newly hired
“
The foundation’s operations were run exclusively managers was down only 8% for the year. Surdna
Surdna remains the tortoise... by certain Andrus family members and a part-time is performing comparatively well in the down
sticking to approved allocations grant maker and secretary. Through the 1970s and
1980s, Surdna’s portfolio was managed by a single Surdna abandoned a finance committee structure
turn so far.
and the portfolio discipline investment manager–banker. Typical of the times, in 2003 in favor of an IC (investment committee)
Surdna remains the tortoise and not the hare
in the investment markets, sticking to approved
”
that individual didn’t understand that you have structure because the finance committee structure
of rebalancing. to beat inflation, plus 5%. The manager basically was too cumbersome and slow. The finance
allocations and the portfolio discipline of
missed every opportunity through the 1980s. An rebalancing.
committee managed all budget, accounting,
Surdna’s legacy is to focus on and support all-family board managed the grant making from a and investment business and was made up of
causes—orphaned children, for example—that three-room office at 100 Park Avenue in New York. self-nominated members; the entire board was What advice would you give a CIO who
historically have had few champions. Surdna’s involved. In contrast, the IC is limited to five doesn’t have a board of family members
original mission was finding long-term solutions In 2005, Surdna added three non-family board members who are appointed by the board chair. who understand investment complexities
to disruptive social, economic, and cultural members who have enhanced the already high They deal with only investment business. The and good governance practices?
changes. We’ve made grants for community and quality of the foundation. Board members are IC can hire and fire managers and rebalances The best advice I can give is that you have to
environment revitalization, the arts, and general uncompensated, except for a small discretionary
stick to your guns and be disciplined. Even when
“ These days, supporting
nonprofit sector support. These days, supporting grant pool, and they attend four meetings a year.
it seems painful to reallocate back to equities,
environmental sustainability is mainstream, and Plus, they commit to many hours of committee
you have to do it. Nonprofits must take the long-
we hope this is due in part to our efforts. work related to grant policy.
environmental sustainability term view because we’re around for perpetuity.
We’re not worried exclusively about this quarter,
John and Julia had 8 children, and their How have Surdna’s operations is mainstream, and we hope next quarter, or even one-year or two-year returns.
”
descendants now number well over 400. Surdna’s evolved since then?
board has had the good fortune to recruit some
Starting with Cambridge Associates and Fred
this is due in part to our efforts. I’m concerned about my five-year returns, eight-
dedicated and talented professionals from the year returns, ten-year returns. Those are the time
Moon, we adopted investment guidelines and
family over the years. the portfolio regularly, within the board-approved periods on which I make judgment calls. History
policies that covered rebalancing discipline,
manager selection, due diligence, and spending asset allocation range, working closely with shows us that’s the time horizon you have to look
rules and calculations. I was tasked with Cambridge. I’m one of the voting members of at because business cycles run this long. If you are
coordinating all of the investment policies, the IC, and this structure enables us to move rebalancing all along the way, investment returns
monitoring managers, conducting due diligence, quickly, for example, when a previously closed can be reaped.
and establishing administrative controls, checks, manager suddenly has capacity.
and balances.