Recruiting top talent can be a challenge for nonprofit investment funds because many, if not most, potential recruits are unaware such opportunities exist. Meanwhile, major investment banks and consulting firms actively snap up potential entry-level talent at top universities where students know all about these opportunities.

That was one of the challenges Kim Sargent encountered when she took the helm as chief investment officer at The David and Lucile Packard Foundation in Los Altos, California, in January 2018. “When we would go and try to recruit [at colleges], we were just not having any luck,” Sargent recalled.

To address this challenge, she came up with the idea of sponsoring a summer seminar and internship program for undergraduates that would expose them to the world of managing investments at nonprofit organizations.

Sargent next talked with investment officers at other foundations about this common challenge they faced, and asked them to join her in sponsoring the program. “I talked with a lot of institutions,” she said. That first year, however, only two foundations were willing to sign on. “So, we decided to start small,” she said.

In her first summer as CIO, the foundation, along with the James Irvine Foundation and the UCSF Foundation—all in the San Francisco Bay area—launched the Endowment Management Investment Fellowship (EMIF) program. The program enrolled four undergraduate students and has operated every summer since.

“We’ve had fellows go on to work at our endowments, and also fellows whom we have placed at our investment managers—and we’ve gotten great reviews from the students about their experience,” Sargent said.

The program begins with a seminar; then, over the summer, investment managers make presentations about their investing strategies, talk about their careers, and answer students’ questions. At the end of the internship, each student makes a presentation.

The seminar and both speaker and fellow presentations may be made virtually and then shared remotely with the participating sponsors. “We have improved the program every year,” Sargent said.

This past summer, the program expanded to the East Coast and had seven participating institutions and 14 fellows. Packard itself recruited a fellow who is slated to work at the foundation after he graduates next spring.

“Students who go through [the seminar and internship and are hired by a foundation in investment management] become alumni ambassadors for the program at their college,” encouraging students in new classes to give it a try, Sargent said.

“Recently, we have partnered with Sponsors for Educational Opportunity to add more diversity to the program, and we’re excited about the many young lives we are touching through this fellowship,” Sargent said.

This coming summer, the EMIF program expects to have 10 participating institutions and—so far—about 16 fellows. “It feels like the wheel is starting to turn on this project,” Sargent noted.

The David and Lucile Packard Foundation was founded in 1964 and operated as a small, family foundation for over three decades.

Lucile Salter met David Packard at Stanford University while a student, and they were married in 1938. She was then a volunteer at the Stanford Convalescent Home, which treated children with tuberculosis. Packard also met Bill Hewlett while at Stanford, and the two co-founded Hewlett-Packard Co. Lucile, taking on supporting roles, helped with building the business.

The Packards donated $40 million to Stanford University, a grant that enabled the school to build a new children’s hospital there. They also donated millions to the Monterey Bay Aquarium and the San José Museum of Art.

When David Packard died in 1996, nine years after his wife, he left the bulk of his estate to the foundation, most of it in Hewlett-Packard Co. stock. In 2003, the foundation’s board of trustees approved a strategy to diversify the portfolio, and the foundation began to invest in stock index funds and bonds.

In 2007, the foundation hired John Moehling as its first CIO. He hired an investment team to build a new institutional portfolio. Moehling retired in 2017, after which Sargent, who had been with the foundation since 2008, became CIO. She is one of a staff of 13: four in operations and administration and nine investment officers, Sargent said.

At year-end 2020, The Packard Foundation held $9.8 billion in assets.

Since 2008, when the fund began to diversify under Moehling’s leadership, the foundation’s performance has ranked in the top 5% of foundation returns, according to Cambridge Associates. While Packard does not reveal the details of that performance, Sargent compared it broadly with that of two other measures for which returns resemble each other: the median return for foundations and the return from a standard portfolio of 65% stocks and 35% bonds.

If Packard had followed either of those two investment strategies, Sargent said, it would have $3 billion less in assets at the end of last year and would be spending $150 million less per year on grants.

Sargent, a 2000 graduate of Yale University, began her investment manager career as a senior analyst at the Yale Investment Office. She received a Master of Business Administration from Stanford University Graduate School of Business in 2006, and next worked at McKinsey & Co. in San Francisco from 2006 to 2008.  She joined the Packard Foundation in 2008 as a manager and associate director; she advanced to managing director in 2010, and then senior managing director in 2016 before moving into her current role.

—Robert Stowe England