Sourcing and Diversifying Investment Managers

The Foundation was endowed with an initial gift from John and Catherine MacArthur in 1978. We do not seek or receive funding from the government or other public or private sources. We depend on the earnings and growth from our investment portfolio to fund our charitable spending and operations.

We use two methods for management of investment assets: an investment portfolio designed to earn a financial return sufficient to support a substantial, stable level of grantmaking and related operating activity over the planning horizon; and an impact investments portfolio dedicated to the advancement of our program and philanthropic purposes.

With respect to our investment portfolio, we do not invest directly in individual companies; rather, we invest with managers who invest on our behalf and on behalf of other investors through pooled funds. We seek managers who can outperform applicable benchmarks over long periods of time and, therefore, generate excess performance (outperform the market).

Within the public markets, this means we have focused on hedge funds in lieu of more traditional “long-only” funds. In private and public asset classes, we want to see assets under management that are commensurate with the manager’s strategy and can adequately support the manager’s business model and prospects for success.

In evaluating any prospective manager, we consider several factors and criteria, including:

• Assets under management;
• The manager’s fit within our overall strategic approach;
• Past performance;
• Extent of drawdowns in a variety of market conditions;
• Transparency in reporting and policies;
• Consideration of the manager's financial, accounting, risk, ethics, and other policies, including the firm’s approach to Environmental, Social, and Governance (ESG) factors and its commitment to diversity, equity and inclusion; and
• Statistical analysis of factors that we consider important in obtaining strong risk-adjusted returns such as the information ratio, alpha generation, tracking error, and volatility.

Our commitment to the Just Imperative requires us to regularly assess our decision-making and, with respect to our investment portfolio, the processes by which we select investment managers.

MacArthur has always been willing to invest with any manager who met our investment criteria. We determined several years ago, however, that it was necessary for us to take additional steps to ensure that we are identifying a broad range of firms and/or removing barriers that were not always meaningful to future investment performance. We periodically review our processes and criteria to be sure that our selection of managers identifies a broad range of qualified investors. We believe that with the changes we have made, and will continue to consider, we can identify more investment firms, including those led or owned by women and people of color, in compliance with the law.

We intend to track our progress in working with a broader range of investment managers, including people of color and women. We participate in the Lenox Park survey of managers and encourage our managers to do the same and receive a report annually based on Lenox Park’s proprietary scoring system. As of December 30, 2024, we estimate we had approximately 23 percent of U.S.-focused assets committed to diverse investment firms.

Below are some of the steps we have taken over the last several years to improve our processes and remove barriers:

• Contracting with Lenox Park, a leader in centralizing demographic data within the investment industry. Lenox Park fosters greater transparency and standards for diversity, equity, and inclusion by combining its experience with tech-enabled data aggregation and analytic tools. Lenox Park has developed a comprehensive diversity assessment that captures metrics such as leadership and staff demographics, hiring, attrition, and board representation.
• Signing on to the Institutional Limited Partners Association Diversity in Action Pledge.
• Allocating $100 million in capital to new managers with a focus on managers who may lack the track record and the amount/number of assets under management of larger, more established managers.
• Using a database of marketable managers maintained by Cambridge Associates, we routinely evaluate managers, including those Cambridge Associates considers diverse, to determine whether their performance and characteristics fit our investment criteria.
• Networking with peers, industry consultants, and others to identify potential firms.
• Meeting with a variety of firms, including people of color- and women-led firms, and participating in several roundtables and forums to expand our networks.
• Monitoring various firms, including diverse firms, that may become open to investment, increase their assets under management, or improve long term-performance records.
• We use a variety of sources to help identify a diverse pool of potential candidates. We are an equal opportunity employer and hope that such an approach provides opportunities for people interested in the field to learn about the investment business and develop necessary skills.

In this context, we will continue our efforts to identify and retain a broad range of qualified investment managers as we seek to achieve our investment objectives over time and to sustain our charitable mission.

Managers interested in being considered by the Foundation should contact the following staff:

Private Equity: Mark Franke or Melissa Richlen
Fixed Income and Liquid Credit: Joseph Rumph
Global Public Equities: Buck Betten or Eric Vaang
Real Estate and Energy: Caixia Ziegler

View our annual financials