For a foundation that does no fundraising, has no debt and, until recently, did not use lines of credit, liquidity is key.

Jonathan Hook, who retired on August 31, 2022, from The Harry & Jeanette Weinberg Foundation, where he had been CIO since 2014 when the four-person investment office opened, says, “You have to make sure you never get too short of capital in the best of, or the worst of, times.”

From the beginning, the foundation always planned to keep the investment office small, to keep the organization’s grantmaking as its main focus. To that end, the foundation aims to make grants each year totaling 5% of the corpus.

“So if the portfolio goes up [as a result of investment returns], we have more money to give away,” says Hook.

In his application for the CIO award program, he explained how that philosophy drives the overall investment perspective. “We view risk as the permanent loss of capital, as opposed to volatility,” Hook wrote. “That said, we need approximately $150 million per year of liquidity for grant payments, plus about $30 million for operations. … As long as we plan our liquidity and keep the targets in sight as well, [and] do scenario forecasting to assess ‘worst-case’ scenarios, we can handle market disruptions or downturns.”

He adds in an interview with CIO that as a mission-driven organization, he found it important to integrate the investment team with the rest of the organization: “I found it was key that [the investment team] was integral in the grants and integral in helping to run the foundation.”

During the last portion of Hook’s tenure at the Weinberg Foundation, headquartered in Owings Mills, Maryland and in Hawaii, the focus of the investment office was to restructure the $3.2 billion portfolio.

“In the last half of 2020, our investment committee (with staff) went through a deep dive of each part of our portfolio. We looked at our holdings, our real estate sales process—which was ongoing through a parallel track—and our benchmarks to make sure we were comfortable with each and make sure that every part was working in sync with each other,” Hook wrote in the application for the CIO award program. “We finished that at the end of 2020, which meant that the next 18 months (to June 30, 2022) would be the time to execute the changes.”

The goal is to move from 50% wholly owned real estate assets—many of them bought by the foundation’s founder, the late Harry Weinberg, in Hawaii before it became a state in 1959—to 25% real estate by roughly 2025.

The change means adding risk to the portfolio by selling real estate and adding private equity, venture capital and blockchain-related investments, aiming for a new guideline allocation metric of 75% growth assets and 25% diversified assets.

Regarding the blockchain investment in particular, Hook says it was purchased in 2022 as the cryptocurrency market declined, allowing the foundation to enter that market at a lower entry point.

Hook regards that investment as “educational research and development” for the future, which is a position that fits into his perspective that “a huge part of what a CIO needs to do, or should do, is to be an educator.”

“Every CIO needs to educate, and that is closely tied to [also having} the ability to communicate,” across the investment team and to the board, he says. “Talking through decisions and making sure they understand your point of view; education and communication are key so that your committee members are hopefully your allies. That is a key factor. It is a lot better if everyone is on the same team.”

With the perspective of someone who has retired to do advisory work, serve on boards and play some golf, Hook also offers advice about the talent challenges facing investment teams, especially smaller ones that may be seen as training grounds for larger asset owners.

—Amy Resnick