Longwood Gardens has a $575 million endowment that supports about half of its $40 million annual operating budget. In the past, the endowment was less diversified and relied more on dividends, but it now has 33 investment managers across asset classes like stocks, bonds, venture capital, and hedge funds. The diversified portfolio helped Longwood weather the recent financial downturn better than in the past. Longwood also earns revenue from admissions, events, restaurants and gifts shops, and receives capital funding from a separate foundation. It aims to strengthen these revenue streams and continue offering excellent gardens, horticulture, education and arts programs.

1. A special reprint from Volume 5, Issue 1 Spring 2010
CLIENT PROFILE: Longwood Gardens
4
CLIENT PROFILE: LONGWOOD GARDENS
with organizational issues that require attention. plan, which will outline the use of our 1,077-acre
Portfolio
I think our strategy of utilizing a small three- property for the next 40 years. Our goal is to have
person subcommittee allows us to stay nimble Longwood be clearly recognized internationally as
and make decisions without a lot of bureaucracy. one of the greatest gardens in the world.
What initiatives are you
most excited to undertake?
Fisher: With all of the exciting new initiatives that
Longwood is undertaking, it is more important
than ever to ensure our endowment is thriving. Blossoms at
Longwood
Redman: Our strategic plan has just been formally With half of our operating budget being supported
approved by the Board and lays the groundwork for by the endowment, we must continue to focus
Longwood’s future. We will continue to offer excel- on asset allocation and good manager selection.
Gardens
lence in garden display, horticulture, education, and I think our process is disciplined and effective
performing arts. We are in the process of selecting and the results speak for themselves.
a landscape designer to help us with our site master
By John Maden
C A MBRI D GE ASSO CI AT E S L L C
L
ongwood Gardens Director Paul Redman Tell us about Longwood Gardens’
AR L ING T ON Cambridge Associates is a privately held, independent consulting firm that provides investment
703.526.8500
and Chief Financial Officer Dennis Fisher history and mission.
consulting and advisory services. We strive to help global institutional investors and private clients are reinvent-ing the gardens and its
meet or exceed their investment objectives by providing proactive, unbiased advice grounded in Redman: Longwood Gardens was established in
BOS T ON endowment operations for the 21st century. Earning
617.457.7500 intensive and independent research. 1906 when Pierre du Pont purchased the Peirce
international recognition for the gardens as among
family property in Kennett Square, Pennsylvania,
D AL L AS Widely recognized as a leading investment consulting firm, we place a special emphasis on avoiding the world’s finest, their efforts are blossoming just
12 miles from Wilmington, Delaware. The Peirce
214.468.2800 conflicts of interest and maintaining complete independence from money management firms. as “staycations”—daytrips to local attractions—have
brothers had created an arboretum, which was
Our non-marketable alternative assets benchmarks, Cambridge Associates U.S. Venture Capital Index® become popular among cash-conscious consumers.
L ONDON then considered the nation’s greatest collection
44 (0) 20 7592 2200 and Cambridge Associates U.S. Private Equity Index®, are published in Barron’s and are widely During an interview in March, they shared how their
of trees. Mr. du Pont’s ambition was not only to
considered to be the industry-standard benchmark statistics for these asset classes. organization went from allocating to one manager
ME NL O PAR K save the trees from logging but also to continue
for stocks and bonds to a diversified portfolio whose
650.854.8400 Founded 35 years ago, we serve an international clientele from offices in Arlington, Virginia; Boston, the horticultural tradition.
investment and spending policies allowed the half-
S ING APOR E Massachusetts; Dallas, Texas; London, England; Menlo Park, California; Singapore; and Sydney, Australia. billion-dollar endowment to weather the recession.
65.6224.8688
www.cambridgeassociates.com
S YDNE Y
61.2.9229.6500

2. Mr. du Pont trained as an economist and chemist, and opportunity for the future was something in 1997, the year we hired Cambridge, and the In addition to our operating budget, we receive
and so Longwood became an engineer’s garden that I wanted to be a part of. Having come from a first thing we did was break out the equity into funding for our capital needs from the Longwood
How does the endowment support year, we budgeted 3.39% spending, but with
that reflected his scientific temperament. Mr. national accounting firm, I was intrigued by the U.S.operating budget today?
the small-, mid-, and large-cap allocations and Foundation, which isvalues in decline, the
average endowment a separate grant-making
du Pont’s world travels shaped his tastes, and he responsibilities associated with overseeing one of add dedicated international equity. At first, the organization that wascap spending atMr. du Pont.
challenge will be to also created by 3.5%. But
envisioned an arboretum to rival those he saw in the country’s largest endowments and knowing Fisher: Longwood, Inc. has two sources of revenue.
bond allocation did not change, but in 2000 we
2
we are not burying our heads; we’re investing
3
Europe, with music, entertainment, and fountains those funds would be used to give back to the Operating income, which is made up primarily
switched to a laddered Treasury portfolio where Prior to diversifying the portfolio, we used
in a strategic plan that maps out our intentions
of revenue from admissions, restaurant, gift
CLIENT PROFILE: LONGWOOD GARDENS
CLIENT PROFILE: LONGWOOD GARDENS
to engage all the senses—the measure of an public. The view from my office is not bad, either. we hold bonds to maturity. interest and development, and we’re continuing
for facilities dividends for our operating needs.
shop, and events, is nearly half of the $40 million Post-diversification, the business.
to focus on growing these no longer met our
operating budget, and the endowment provides
We now have 33 managers in the portfolio, operating needs. Consequently, we instituted a
the rest. We are fortunate and private equity
including venture capital to have nearly 900,000 spending policy: 3.5% of the 36-month average
visitors to Longwood each yearHedge funds30,000
partnerships and hedge funds. and nearly are What of endowment,you give in June each year.
value advice would calculated
members. Weand in late 2007 highest attended
roughly 15%, are one of the we began building similarly situated organizations?
For the last five or six years our spending policy
public gardens in the United States. currently
the private investments portion, which has been Toughof endowment,creative solutions.
Redman: 3.5% times require and this helped
stands at a little less than 4% with a goal to us weather the looking at ways in which to diversify
We have begun market downturn. Actually, our
“
Longwood Gardens’ ultimately reach 10%. five-year average spending was one time Longwood
our business overall. Whereas at 3.1% going into
Chief Financial Officer
Dennis Fisher (L) and
For the last five or six years our this year; however, we anticipate things willlook
focused solely on paid admissions, we now be
How does portfolio diversification tight, particularly for the next to help us flourish.
to alternative funding streams two years. This
Director Paul Redman (R) spending policy has been 3.5% of
affect spending? year, we weather is 3.39% spending, but withfactor,
Because budgeted certainly an unpredictable
endowment, Prior to 1997, wehelpedendowment to
Fisher: and this relied on us average endowment values diminish the impact of
this new model allows us to in decline, the
”
support the operating budget with interest and challenge will be to cap have turned our attention
weather on our gate. We spending at 3.5%. But
weather dividends only. When we began to diversify, we
the market downturn. wegrowing burying our heads; we’re investing
to are not our membership base, educational
trimmed the single-stock position and cut back in a strategic plan that maps events, and annual
programs, performing arts out our intentions
on bonds, so we had to change our spending for facilities development, and we’reour revenue
programming in order to broaden continuing
In addition to our operating budget, we receive to focus on growing loyal and engaged visitors.
streams and create the business.
philosophy. This was the biggest challenge that
funding for our capital needs from the Longwood
diversification posed. In addition, the laddered
Foundation, which is a separate grant-making
Treasury portfolio provides us with liquidity, which Fisher: For stability you give
What advice would and long-term growth of the
organization that was also created by Mr. du Pont.
has been very beneficial during these tough times. endowment overall, you have to diversify. You need
similarly situated organizations?
a good decision-making process and clear standards
How do you manage the oversight
“
excellent garden. Today, Longwood encompasses Redman: Tough times require creativeperformance.
for evaluating asset class and manager solutions.
of the investment portfolio?
more than a thousand acres, including meticulously
landscaped gardens, natural woodlands, meadows,
For the last five or six years our We have begun ahead of the game is keeping on
Key to staying looking at ways in which to diversify
our business overall. Whereas at one time Longwood
Fisher: As CFO, I am responsible for the financial
and elaborate fountains, whose flow can be set functions of the gardens. We have an Investment spending policy has been 3.5% of top of manager issues, as the markets are always
focused solely on paid admissions, wesurprise you
changing. Individual managers often now look
to music. The pipe organ, housed in Longwood’s Committee of our Board of Trustees that is
endowment, and this helped us to alternative funding streams to help us flourish.
with organizational issues that require attention.
”
4.5-acre conservatory, is one of the world’s largest. responsible for the management of the endowment, Because weather is certainly an a small three-person
I think our strategy of utilizing unpredictable factor,
Longwood’s mission is to inspire people by
setting a standard of excellence in garden design,
currently valued at $575 million. We have a three- weather the market downturn. this new modelallows us to stay nimble and make
subcommittee allows us to diminish the impact of
weather on our gate. lot of bureaucracy. attention
person investment subcommittee that takes an decisions without a We have turned our
horticulture, education, and the arts. active role in asset allocation, manager selection, to growing our membership base, educational
and oversight. The subcommittee members are How does the endowment support used
Prior to diversifying the portfolio, we programs, performing arts events, and annual
the operating budget today? operating needs. What initiatives are you
What attracted you to Longwood? all seasoned investment professionals. interest and dividends for our programming in order to broaden our revenue
most excited to undertake?
Post-diversification, these no longer met revenue.
Fisher: Longwood, Inc. has two sources of our streams and create loyal and engaged visitors.
Redman: I was the executive director of Franklin Park Redman: Our strategic plan has just been formally
Redman: The portfolio has changed significantly operating needs. Consequently, weup primarily
Operating income, which is made instituted a
Conservatory and Botanical Garden in Columbus, Ohio. approved by stability and long-term growth of for
Although I was very content at Franklin Park, I could over the last few years under the leadership of the spending policy: admissions, 36-month average
of revenue from 3.5% of the restaurant, gift Fisher: For the Board and lays the groundwork the
value of endowment, nearly half in June$40 million
shop, and events, is calculated of the each year. Longwood’s future. We will continue to offer excel-
endowment overall, you have to diversify. You need
not turn down the opportunity to lead Longwood. Investment Committee and Dennis. In 1993, we
For the last five orand years our spending policy
operating budget, six the endowment provides lence in garden display, horticulture, education, and
a good decision-making process and clear standards
The thought of leading one of the great public had one investment manager for the portfolio.
has rest. We are fortunate to have nearly 900,000
the been 3.5% of endowment, and this helped performing arts. We class and managerof selecting
for evaluating asset are in the process performance.
gardens in the world was irresistibly enticing to me. A portion was in stocks and bonds, but 50% was
us weatherLongwood each year and nearly 30,000
visitors to the market downturn. Actually, our a landscape designer to help us withis keeping on
Key to staying ahead of the game our site master
a single stock of a major U.S. company.
five-year average spending was 3.1% attended
members. We are one of the highest going into plan, which will outline thethe markets are always
top of manager issues, as use of our 1,077-acre
Fisher: The opportunity to work for Longwood
this year; however,the United States.
public gardens in we anticipate things will be property for the next 40 years. Our goal is to have
changing. Individual managers often surprise you
Gardens is one that you don’t refuse. The world-class Fisher: Right. Today, we’ve diversified the portfolio
tight, particularly for the next two years. This Longwood be clearly recognized internationally as
reputation of Longwood and the incredible history much more, and this has been very beneficial for
one of the greatest gardens in the world.
the endowment. We began to diversify in earnest
Fisher: With all of the exciting new initiatives that