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The Net Assets podcast delves into the most pressing issues in independent school business and operations. Delivered by NBOA, the only national nonprofit membership association focused exclusively on fostering financial and operational excellence among independent PK-12 schools, each episode is based on a popular article in NBOA’s Net Assets magazine. Chief financial and operational officers alongside other leaders of school business share what inspires and challenges them as well as their approaches to problem solving and innovation. In each lively exchange, host Jeff Shields, NBOA president and CEO, teases out the human stories behind the printed story.
When I speak to independent school leaders and business officers, it's less about prescribing risk, but it's about asking questions about how are you thinking about risk? What risks are you prioritizing and how are you doing that? Because that's going to be an important part of adapting in this climate. Welcome
Speaker 2:back to the NetAssets Podcast. I'm your host, Jeff Shields, MBLA President and CEO. And today I'm joined by George Suttles, Executive Director of the Common Fund Institute. Now, for those of you who may not know George, he is a respected voice in philanthropy, governance, and investment strategy, and we're really thrilled to have him with us. And for those of you listening who may be unfamiliar with MBOA, we're the only national association focused exclusively on business and operations professionals in independent schools.
Speaker 2:MBOA empowers our member institutions with knowledge, community, and tools to lead their schools with confidence and clarity. The NetAssets podcast is part of delivering on our mission, bringing you insights from leaders shaping independent education today and into the future. Find out more about MBOA at mboa.org. And with that, please welcome to the podcast, George Suttles. George, it's good to see you again.
Speaker 1:Good to see you too, Jeff. Thanks for having me. I really appreciate it.
Speaker 2:It's a pleasure. And, George, before we get into some serious stuff because investment strategy is some serious stuff for schools, I have to ask last year's common fund reception at the MBUA annual meeting in New York City was at the historic Sardis. Right? That was such a memorable evening. What stood out to you from that night?
Speaker 1:Yeah. An incredible evening. And I think what stood out the most, and I must say I always feel just incredible energy and warmth anytime I'm with our NBOA community and our partners. And I think that's what stood out the most. It's just the energy, the warmth.
Speaker 1:As you mentioned, Sardi's is a historic New York City restaurant. Yes. And our NBAA community really showed up for us to celebrate the partnership. Incredible vibrancy, just incredible joy was felt just in gathering. And like I said, I always feel that when I'm in community with our NBAA community.
Speaker 1:And it was just a great reminder of how meaningful in person connection can be. So we were just really grateful and appreciative for the opportunity to fellowship and to gather together at Sardi's. And thanks to you and your team for helping to facilitate that,
Speaker 2:No. No problem. And what's interesting, we pack a lot of learning into the MBUA annual meeting, but I really feel like it's events like the one you just described that really help deepen the connection between NBOA, Common Fund, our business leaders, all within the NBOA community. Would you agree with that? They're just as important.
Speaker 2:And when folks talk about coming to the NBOA annual meeting, networking might be the first thing they talk about how valuable the conversations are in the hallways at the receptions at the morning breakfast. Is that your experience as well?
Speaker 1:Absolutely. And I think even when I talk about the partnership between Common Fund and NBOA and the opportunity to gather with our NBOA colleagues, I'm always reminded of and I'm intentional about using words like community, gathering, fellowship as this work is really hard. Yeah. Our business officer colleagues are going in every day, being asked and tasked with a lot. And so just the ability to celebrate, maybe sometimes even commiserate together.
Speaker 1:Yes. And just be reminded that we really are in sort of communities of learning and practice. No one's going at this alone really not only resonates with me, but I'm just deeply grateful to be in community, to be a part of the NBOA community. Like you mentioned, Jeff, there's dialogue, there's shared learning, there's a deepening of trust, there's an ability to celebrate, commiserate, fellowship, but it really allows us to celebrate the relational aspects of this work. And for me, at least reminds me why we're all in this.
Speaker 1:Yes. And especially given the times that we're in, I I feel like that's more important now than ever.
Speaker 2:You get it, George, and I love that. And I think you really stated it really well. One of the things I learned about you preparing for this is that you're pursuing your EDD at NYU, focusing on leadership and innovation. What's it like being a student again after years of leadership and board service previously? What was the driving force to take this on?
Speaker 2:You're a busy guy as well. What's your experience like?
Speaker 1:Yeah. No. Thanks for that question. I think part of it is just I've always just been an intellectually curious person. I love learning, and I love school.
Speaker 1:And just always actively and intentionally pursuing education, pursuing learning. And so when I was thinking about what might be next on my intellectual and academic journey, a doctor in education at NYU, that program in particular just seemed to continue to bubble up for me. And as I learned more and I connected with alumni from the program, it became more apparent to me that this was something that I wanted to pursue. So there's the intellectual curiosity piece, just my love of learning. But then also, Jeff, really practically to be in community with practitioners, with educators, with business officers in.
Speaker 1:If I wanted to continue to be a part of an add value to these communities of learning and practice, both on the independent school side, the higher education side, and really just participate actively. This doctor in education felt like a really good fit. I wanted to be able to walk in rooms and say, hey, like I'm navigating academic institutions, not only as a practitioner, but as a student. Yep. I understand more fully what everyone is grappling with, and then therefore I can be a more active listener and add more value as a partner.
Speaker 1:And so there was the intellectual piece, but then also the real practical aspect as well too, wanting to build my skills so I could be more helpful to these communities of learning and practice we've been talking about.
Speaker 2:The program includes innovation, not just education. Was that choice intentional for you? I'm really interested. Can you learn to innovate, and what are you learning about innovation in the program?
Speaker 1:It's unclear if I'm, quote, unquote, learning about innovation, but I'll tell you how it feels. It feels equal parts humbling and invigorating. Yeah. Because even for me, when I saw innovation, I was like, what does that actually even mean? And what are we going to learn?
Speaker 1:And so really, the innovative piece from an academic standpoint, what I've learned from all of the theories that we've reviewed and done deep dives on is it's less about innovation for the sake of innovation, but it's about adaptability, resilience, activating people's creativity
Speaker 2:Yes.
Speaker 1:To advance the work in new and in an even more impactful ways. And so innovation is the buzzword, but it really is about how do we both think about protecting ideas and fortifying institutions that we care about. Also, how do we dream? How do we aspire? How do we evolve the work and organize people in a way that they feel really excited about what's next?
Speaker 1:And so I think all of that together is the stew of innovation, right? So innovation's the buzzword, but it's really all of those other things that I have found incredibly intriguing being a student in this program.
Speaker 2:And it takes real leadership, I think, to get people excited about what's next, doesn't it? Because we don't know always what's coming next, and that can be very stressful, very anxious ridden, if you will. So I love that framing of innovation, of embracing it, embracing the change, and thinking about what's next. This past year, we weren't as focused in our partnership about what's next as we were about celebrating twenty years of our partnership between MBOA and Common Fund. For those of you curious about this work, check out mboa.org.
Speaker 2:And, actually, this year's study is open, so folks should participate as we always collect data on independent schools endowments at this time during the fall of each year. But I wanna call out the tracing 20 report, which really was a great look back. Did anything in that report surprise you, or what resonated with you the most when we look back on twenty years of endowment management at independent schools?
Speaker 1:Yeah. And thanks for that question, Jeff. I love look backs. I love retrospectives for a couple of reasons. One, it allows us to see just how far we've come.
Speaker 1:And two, it can serve as a springboard as we've been for aspiration as we've discussed, right? What's the next twenty years going to look like? So what really resonated with me is a few things. Just how much incredible leadership there really is in the independent school space. Because remember, we asked independent school leaders to reflect on just how important it is to benchmark in in this space and just an incredible opportunity to understand that we've got an abundance of leadership in this space.
Speaker 1:I don't know about you, but that's comforting to me.
Speaker 2:I'm glad you see it. I pray that every day for truth and the commitment. It's and commitment to our schools that I feel like is palpable in our community.
Speaker 1:Absolutely. And then the other thing is just the evolution of endowment, man. Just the level of sophistication, just the access to information and asset classes and analytics that independent school business officers now have at their disposal to not only maintain and sustain institutions, but really make investments in strategic growth. And so just seeing the array of tools at our collective disposal as endowment managers in the independent school space, it was deeply resonant. What else are we going to need to access in order to continue to do this work?
Speaker 1:And if twenty years of a look back tells us anything is that we will continue to grow and evolve in our endowment management practices. So at a high level, that's really what resonated with me out of the tracing 20 report. So
Speaker 2:I once had a business officer tell me that the common fund study that we work on together is the only report she makes sure she brings in to her finance and audit investment committee every year. And I think I think maybe this year they could add the Tracy twenty report to it because I think trustees always benefit from having context beyond their school. And the idea that you just described, that look back, how far have we come and how can that inform the choices we make in the future, I think is pretty powerful stuff. And I think it's good for trustees to have that information and digest it to inform their decision making going forward. I wanna talk about our recent interview that we did together.
Speaker 2:You were gracious enough to be interviewed for my projections column. It's in the September, October issue of net assets, and it really struck a chord. You said in that interview, endowments are made for this. Now are those tried and true practices of endowment management still holding up today in this environment?
Speaker 1:Yeah. I think at their core, yes, but they definitely require adaptation. So I think diversification, discipline, and long term thinking remain foundational. But in today's environment, it will require adaptation, agility, and a deeper understanding of risk. And I'd like to highlight that.
Speaker 1:Right? It's just like traditional risk frameworks are going to be useful, but we've got to understand what the additional dimensions are. Risks abound, and they can't be eliminated, but they can be effectively managed. And so understanding all of the risks that are swirling around our independent schools are going to be important. So when I speak to independent school leaders and business officers, it's less about prescribing risk, but it's about asking questions about how are you thinking about risk?
Speaker 1:What risks are you prioritizing and how are you doing that? Because that's going to be an important part of adapting in this climate.
Speaker 2:What's interesting, in that same interview, you used the term poly crisis. And I will tell you that a business officer at a recent meeting stopped me in the hallway, mentioned the article, and pulled that term out as something that really resonated with him. It really resonated with me as well. Can you just describe that for our listeners? Because I really think it helped ground you and I in that interview, but helps ground all of us who are interested in this work and the importance of investment management at this time and what the work looks like today.
Speaker 1:Yeah. Absolutely. I can't take any credit for coying the phrase because historians, philosophers, and economists have used that phrase in both practical and economic settings. It just so happens we've been in a moment of managing and so it's become more mainstream for better or worse. I I hope that in the future, the management of poly crises becomes something that is esoteric and we just whisper about we whisper about but right now, it feels like it's front and center.
Speaker 2:But Sure.
Speaker 1:Poly crisis really refers to multiple interconnected crises, whether they're economic, geopolitical, environmental that amplify each other. That's where we are. And I think that makes it incredibly difficult to do this work in a complex environment where you have multiple think about that. Multiple crises that are interconnected that amplify each other. Jeff, can we get a break?
Speaker 1:Can we, when I see that or I study it, I go, can we get some respite? So multiple crises interconnected that amplify each other. It's oh, one has to take pause and a deep breath. But I think for schools, as we mentioned about risk, this means additional layers of strategic consideration and thinking in order to not only make investments in institutional resilience, but create space for adaptability and, again, don't wanna be cliche, but innovation. Now how are we going to evolve?
Speaker 1:There has to be opportunities here, and I know it can feel like we're drinking water out of a fire hose. But if we can effectively invest in resiliency, that may give us just enough breathing room to innovate in ways that are going to be exciting to stakeholders, to fit to students, to families, to the communities that we care about. And maybe there's a strategic opportunity for growth given we're in a poly crisis, but you won't even be able to explore that if you haven't first invested in institutional resiliency. And so wish and want that for our independent schools, both to be resilient and also create some breathing room for for adaptation, for evolution that's mission focused.
Speaker 2:But isn't that why you advocate on going to the risk framework that you have to start with the foundation and that discipline of assessing risk, understanding mitigations for risk, understanding your risk tolerance So where you might wanna make good bets, safe bets, inform bets, and I I don't like the word bet with talking about independent school endowments. You know what I mean? But it really takes all of those things, but it starts with a strong foundation of understanding the your risk exposure when it comes to your investments, what your needs are really from your endowment, what do you desire from your endowment for it to financially support at your school, and maybe not get so caught up in that, understand it, but pull it into the risk assessment process versus just feeling like you're spinning out here and that it feels out of your control, which some of it is, but you have to ground it someplace. Otherwise, you're just gonna get caught up in it, it seems to me.
Speaker 1:Yeah. Absolutely. And then another thing I'll reflect on is it's not lost on me that for an independent school to have a healthy robust endowment is a privilege because many independent schools do not have endowments. But to your really good point around scenario planning, discipline, risk management in a multi dimensional comprehensive way. If there is an opportunity for us to manage risk as comprehensively as possible, we should try to lean into that.
Speaker 1:The independent school leaders and the leaders more broadly, that can effectively communicate risk, how that risk is being managed and prioritized, how stewardship is being exhibited in a very complex environment, has an opportunity to activate stakeholders and motivate philanthropy in ways that may be true to the culture of your institution and may be new. Yeah. The providing of new opportunities for people to engage in ways that either they're used to or in new ways that they haven't been used to is one of those strategic opportunities. Here's how we're thinking about this. Here's how we're thinking about stewardship.
Speaker 1:Here's how we're thinking about our needs. Here's how we can clearly articulate our needs. If you believe that we're effectively stewarding this institution, and you care about this institution, here are the opportunities for you to activate and engage. Those are clear pathways and mandates for activation that I know that I appreciate not only as a practitioner, but a donor. I am a beneficiary of the independent school community, a proud graduate of the Dalton School.
Speaker 1:And if you get that clear mandate, you're like, that sounds smart how you're thinking about protecting and growing the institution, especially in a time of a poly crisis. And you're clearly articulating what the opportunities and the needs are. That's my activation. That's my opportunity. And so I think we're really seeing tremendous leadership in independent school space around that.
Speaker 2:Now I'm glad tie in with philanthropy and that solid demonstrated financial stewardship of our schools is really an important asset for reaching out and engaging our community around fundraising and contributing to the finances of the school. That's really powerful, and I really love that tie in. We're always looking for answers. Common Fund Institute studies, both independent school and higher education endowment trends. What are you seeing in higher ed investments in finances that our independent schools can learn from.
Speaker 2:That's always such an important place for us to look for potential solutions, and very often higher ed serves as a bellwether for our independent schools, especially small private colleges in higher ed. What are you seeing there that's similar that we can learn from, and what might be different that we can also learn from?
Speaker 1:Yeah. No. Absolutely. I think at a high level, institutions are thinking about or even rethinking liquidity and their access to cash and then also spending policies in the light of enrollment and revenue pressures. So we're seeing that both on the independent school side and the higher ed side.
Speaker 1:Right. Yeah. Liquidity and spending policies. And then also for those institutions that have endowments, there are obviously investment in economic and inflationary pressures. Angie, poly crises in the portfolio that need to be managed.
Speaker 1:But Yep. The reality is we see and foresee institutions with endowments needing their endowment to work harder in light of federal budget cuts, enrollment pressures, revenue pressures, etcetera, etcetera. And so it's one thing to sit in a committee meeting or a board meeting and say the endowment needs to work harder. But what does that mean? And what are the opportunities?
Speaker 1:And so really thinking about risk management and scenario planning, not just broadly from an institutional standpoint, but also from an endowment management and portfolio standpoint as well is going to be something that I think is going to continue to be important. But, again, at a high level, rethinking liquidity and spending policies is something that is almost a universal consideration in these investment finance committee meetings, both on the higher ed side, on the independent school side. And then also too, if we're gonna have conversations about quote unquote, the endowment working harder, what does that mean? It means your portfolio may need to take on more risk. And so how do you do that prudently across asset classes in a time where there is incredible market volatility and uncertainty?
Speaker 1:And so those are the types of high level conversations without speaking to an asset class or an investment opportunity in particular, but just at a very high level, the type of governance and policy conversations that we're having at the institutional level.
Speaker 2:Really helpful insight, and it's so valuable that Common Fund occupies both those worlds. I think it's valuable to both communities. We're gonna wrap it up. I wanna talk about the Common Fund study of independent school endowments, our twenty year partnership now, the twenty first. Data entry is open now through December 5.
Speaker 2:In your own words, George, why is this study so important?
Speaker 1:We use the old adage knowledge is power, Jeff, and so the ability to do prudent precision benchmarking amongst peers is just an important opportunity, not just to understand where your institution is respective to others, but as a community to identify trends and opportunities for collective understanding and growth, right? So we want respective institutions to do well. But again, as I mentioned at the top of our conversation, as a community of learning and practice, this is a great tool for all of us to learn together so that we can all grow together.
Speaker 2:I love that message. Grow together. And if you're a school that hasn't participated in this study before because your endowment's doing well, you have a great investment manager, etcetera, etcetera, think of it as an opportunity to lead. Think of it as an opportunity to demonstrate that we can grow together, that we're a learning community, and share the practices, share the approaches, share the governance that you do at your school so well with others and position your school as a leader. That's my message to schools that really perform well in this space, create the opportunity.
Speaker 2:You performing well is not lessened by others performing well. All of us can do well and grow together. And I wanna leave it there, George. You've been a great guest. So thank you so much for joining us today.
Speaker 2:You're always so thoughtful, insightful, and certainly timely. I know our listeners will take away a lot from this conversation. And remember, MBUA is your partner in leading the business of independent schools. We're here to help you thrive in every aspect of school business, finance, and operations. You're never alone with MBOA.
Speaker 2:For more information on joining MBOA, upcoming programs, our online communities, research, resources, and tools, visit us at mboa.org. Until next time, I'm Jeff Shields, mboa president and CEO. Thanks for listening to the NetAssets podcast.