A Family Opens Up About Its Investing Mistakes

An added level of complexity is when a family agrees to change course. Building a strategy from scratch isn’t easy, but scrapping the old one for a new, untested one is harder, said John Zimmerman, president of Ascent Private Capital Management, the US bank’s wealthy arm.

“It’s harder and more complicated than a blank sheet of paper,” said Zimmerman. “You need to get alignment from scratch or from an existing foundation.”

At the time the Board of Trustees voted on the Nathan Cummings Foundation’s investment strategy change, the $ 450 million portfolio was geared towards less progressive investments. Just under 43 percent of the money was invested in the foundation’s report, which I saw earlier: “No-Go” investments – think fossil fuels – while 44 percent was invested in assets that are supposed to “avoid harm”. The amount aimed at “contributing to solutions,” such as providing money to historically overlooked black companies, was literally a rounding error: 0.1 percent, or about $ 450,000.

Nevertheless, there was initially skepticism on the board. John Levy, an outside-family trustee and entrepreneur who runs a quantum computing company, Seeqc, said he was concerned that the investment products available at the time would not help the board achieve its goals.

“I wanted to make sure that people as well-intentioned as this group could pay their salaries and give their grants, and that we could do so for many years,” he said.

But Ruth Cummings, who is Nathan’s granddaughter and was the chairman at the time, urged the committee to consider how changing investments could increase the impact of granting.

Four years later, the “no-go” bucket has dropped to less than 5 percent. The investments to prevent damage are still around 44 percent. Investment in another area, “Stakeholder Benefits”, has increased significantly to 27 percent. This is the amount that is invested in, for example, a private equity fund that supports companies that improve the quality of healthcare. In addition, the investments that are intended to “contribute to solutions” are almost 19 percent.

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