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Guest: The UI Foundation needs a major overhaul

BY THOMAS WOLF - GUEST OPINION | JANUARY 22, 2010 7:30 AM

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Congratulations Hawkeye Nation on an incredible football season, capped off with a dominant Orange Bowl victory. I enjoyed the game on television earlier this month — despite the mindless commentary — and it gave me pause to assess the basis of my pride in my alma mater.

In doing so, I reflected on the dedicated faculty, the idyllic campus, and the hearty sports teams that deserve high praise. But then, because of my profession and my hopes for Iowa, I could not help but consider the UI Foundation, whose investment management is not praiseworthy and needs immediate attention.

Instead of raining on the parade, please allow me to expose the issue and define a solution, in the hopes of seizing the opportunity to fortify our world-class university. The thought came to mind — and is timely — because I think the situation is very analogous to Division-I college football if you can accept that the context is big business and then proceed from this perspective.

The Hawkeye football program is a large asset and is being managed very well, arguably optimizing its revenue opportunity. This is driven by head coach Kirk Ferentz, whose compensation is high on an absolute basis but is a terrific value relative to his peers’ compensation and even more so when factoring in results. The university desires to be competitive in football and is successfully executing a plan to achieve its goals.

This is not the case for the UI Foundation.

For football context, think of the dismal era post-Evashevski and pre-Fry: ineffective leadership and subpar results. Without question, the investment committee has good intentions and is well supported by a board which has generously provided time and money to the UI Foundation. But the simple fact is, the investment results have been lacking.

While these results are not uncommon for volunteer investment management, it does not have to be the case. Just as in college football, qualified, experienced head coaches (for foundations, they are called chief investment officers) are available and, better still, work for performance-based compensation consistent with the investment mandate of the institution.

When new leadership has ownership of the role, accountability will be commercially enforced, similar to football: What was our record for the year? How did we do in conference? Nationally?

What players do we need? Is this still the right head coach?

This mandatory evolution is long overdue — and for fine examples of this approach, look no further than the University of Michigan or Northwestern University. To quantify approximately what peer-like performance would mean to the current endowment, a top-20 finish in college-endowment performance results on the current asset base would yield more than an additional $50 million per year. Why are we not competing?

Over the past few years, I have encouraged the UI Foundation to take steps in this direction, and I have been dismissively told that the UI Foundation cannot afford to take these steps. The reality is there are a billion (approximate UI Foundation dollar value) reasons we can afford professional management. It pays for itself — thankfully, as does Ferentz.

Thomas Wolf is a UI graduate and Chartered Alternative Investments analyst.


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