Asset Allocation, Endowments/Foundations, Institutional Investors

Asset Owner Spotlight: Carolyn M. Weiss, CFO, The New York Community Trust

Carolyn Weiss is the chief financial officer and treasurer of The New York Community Trust (The Trust), Community Funds Inc. (CFI), and The James Foundation, a position she accepted approximately five years ago. Weiss is responsible for all financial operations of the three non-profit grant making organizations, which combined manage approximately $2.8 billion in assets. “I have several titles. We are a non-profit grantmaking organization—so, we exist to do good. I have very talented colleagues who have expertise in education, human justice, the arts, people with disabilities and more—I am here to support them. We make grants to organizations primarily in New York City and try to make New York a better place,” Weiss said.

Institutional Allocator Editor Mark Fortune spent some time with Weiss recently, during which she discussed her current role, her career path and her general outlook on institutional investment.

IA: What kind of grants does The Trust make?

Weiss: We fund programs; we don’t run any programs here ourselves. But, we support organizations that do that really well. We fund historic preservation, community development, job training and some environmental initiatives. But what we really do is follow what our donors want. Donors will indicate to us that they want to help with preschool reading initiatives, for instance, and that’s what we’ll do. Program officers will scout around New York City, and they will find out where are the best organizations—where there’s the most success helping the most children.

We also have immigration initiatives. We try really hard to stay in the center—politically neutral. But, any philanthropy is a do-good philanthropy, by definition. And what that means is that we fund legal aid societies and try to help where someone is entitled to have attorney representation, by funding organizations that will provide those attorneys.

IA: What is the structure of The Trust’s funds?

Weiss: We are almost 100 years old; Cleveland, Chicago, and Boston have foundations similar to us. Many major cities have community foundations like ours, where there is a deep understanding of a small geographic region’s needs. There are around 700 community foundations across the country. In the early 1900s, banks had high-net-worth clients who wanted to give to charity. This practice generally wasn’t within the skill set of banks at that time. Banks knew more about investing money than giving it away. So, they created trusts for individual families—for the Fortune family, for the Weiss family, etc.  The New York Community Trust owns the charitable assets, but they are still managed by the banks in trust form.

That’s half our balance sheet—that’s over $1 billion of trust assets. These are old assets. It’s a testament to what we do really well and what community foundations do really well, which is to maintain an endowment and spending-plan discipline where a calculated percentage is given out to charity every year.  For next year, it will be somewhere in the range of three to six percent of assets, and around three percentage points more than the prior year’s spending plan, which approximated inflation.

IA: What are The Trust’s total assets?

Weiss: We were almost $3 billion up until a couple of weeks ago, but with October’s stock market volatility, we’ve dipped a little lower. Approximately fifty percent of those assets are managed by banks in the form of trust accounts.  We work with eight major New York City money center banks. That’s how part of our balance sheet is managed and it works extremely well. Our goal is to increase charitable assets while preserving capital. We have traditional investment pools as well within our corporate entity, Community Funds Inc. Donors who establish funds in the corporation have a choice of four investment vehicles: Vanguard Federal Money Market Fund, Vanguard FTSE Social Index Fund, and Community Funds’ investment pool and income pool.

We are working with trust assets on the one hand—fulfilling the wishes of donors that have passed on—and we have living donors on the other side. Charitable gifts come to us from living donors and are contributed to donor-advised or field-of-interest funds, for example. While those assets are on our balance sheet, they are invested in our investment pools or in money market accounts, according to a donor’s preference. Donors can make frequent gifts, and give us $1 million each year—that can happen. But what is more common is the donor will have some kind of liquidity event, i.e., she’ll sell her company and come to us with $10 million in assets. But she doesn’t have time to identify charities at that point. She will come back to us in three, five or seven years and say ‘now I want to work on this plan for STEM education’, or whatever is important to her.

IA: What is The Trust’s investment pool’s asset allocation breakdown?

Weiss: The asset allocation includes public and private equities, fixed income, hedge funds, and real assets—a classic investment allocation. We are pulling back from hedge funds right now and investing more in real assets and private equity. But other than that, our focus is on U.S. equities, international equities from developed markets, emerging markets equities, and fixed income. The Community Funds Inc. portfolio is invested approximately 27% in U.S. equity, 21% in global and international equities, 21% in bonds and cash, 15% in hedge funds, 6% in emerging markets equities, and 5% each in private equity and real estate.

IA: With which consultant does The Trust work?

Weiss: We only use consultants on an ad hoc basis. Other than that, our team works directly with the investment committee to develop the allocation and to implement strategy. We recently enlisted Cambridge Associates for an active manager review and Albourne for a hedge fund portfolio fee analysis.

IA: Tell us about your career path?

Weiss: They tell you at business school to build up a list of companies that you would like to work for. Nobody does that, right? (chuckles). I thought, ‘you know what, I would like to work at The New York Community Trust. Why not?’ We’re the biggest player in New York City in charity and philanthropy. I thought ‘I want to work there.’ So, I made an effort to network with different colleagues, different staff members at conferences, and so on. I learned from them what it was like working here; learned what their attitudes were; learned if it was a good place to work, whether they were committed to the mission of the organization—and they were.

Leading up to joining The New York Community Trust, I was at three prior foundations as chief investment officer and/or chief financial officer. I worked for a donor-advised fund platform with Jewish roots—FJC Foundation. That was a great experience. At the time I joined, investments were tracked on spreadsheets. With support from the board, I implemented front-to-back systems—from a new donor portal through investment reporting. It’s the name of the game these days, working with systems and being able to improve them. The entire staff was involved, and we improved procedures dramatically.

I was the first staff member at The Leona M. and Harry B. Helmsley Charitable Trust in 2009. It was a rare opportunity to build a new organization from the ground up.  

I was an undergrad foreign language major at Penn State University, where I studied Arabic, French and German—I got a well-rounded liberal arts education and had a fantastic time. I graduated in 1981 and then backpacked through Europe. When I returned to the U.S., I got a job within two days as an administrator in the international group within Fidelity Bank in Philadelphia. I made my leap from Philadelphia to New York, the next year, to Bayerische Landesbank, where I could use my German language skills. From there, I went to a Lebanese bank, Bank Audi (USA). That gave me the opportunity to speak conversational Arabic.

Carolyn Weiss, CFO, New York Community Trust, with husband Cyrus Weiss, in Lima, Peru

The best take-away from my jobs in banking was meeting my husband Cyrus Weiss. He encouraged me to pursue an MBA. Because I was studying when I wasn’t working, my husband would cook our meals. And it worked. It was great. It took me three and a half years to complete my MBA at Baruch College. I’ve recently been appointed to the Dean’s Advisory Council for the Zicklin School at Baruch.

From there, I went into public accounting. I joined KPMG in 1987, as an auditor in the financial services practice.  I really liked KPMG. I stayed there for seven years. It was very interesting to work on a variety of client engagements. I was transferred to Germany when the Berlin Wall came down, and there was a tremendous need for audits of former East German companies.

I left KPMG to join Deutsche Bank in 1993. Seven years is a long time in public accounting. I interviewed at only two places—Goldman Sachs and Deutsche Bank. Goldman Sachs offered me a job as controller for China. And I thought ‘China? There’s nothing going on there…’ (chuckles). I turned down the job and went to Deutsche Bank as head of financial reporting for all North American entities. Later, I became the deputy business area controller for equities worldwide. In my last position, I was chief operating officer for Latin America. The last job was the best job—I was responsible for all operations, systems, people—everything necessary to run the business smoothly.

Our daughter Luisa was born in 1999, and I decided that it was time to stay home. My mother-in-law dubbed her the ‘million-dollar baby’—implying that I would have been making a million-dollar salary if I had continued to work. (laughs).

My primary focus became raising my sons Daniel and Andrew and my daughter Luisa.  I then became an accounting professor at Kean University in New Jersey, where I taught undergraduates and MBA candidates at night school. The majority of students had full-time jobs and were completing degrees on a part-time basis. I taught in Xi’an, China as well.

IA: What was your experience like teaching in China?

Weiss: Around 2000 to 2005, there was a strong demand for instructors from American universities with an interest in teaching business courses in China. I accepted and would drop into China for 11 days at a time. I taught accounting in English through an interpreter. The students were government employees seeking to gain some American business sense by enrolling in an MBA curriculum. It worked because numbers are a common language, and I would use my own materials.

Teaching was the toughest job I’ve had. After seven years, I wanted to get back to a more traditional job—a Monday to Friday job. A friend of mine served on the board of a foundation in New Jersey that needed someone to take charge of the growing endowment, The Healthcare Foundation of New Jersey in Millburn. I lived two towns away from the office and I could ride my bike there. That was my first job back after teaching and raising children. I was lucky to transition with this job.

IA: What changes have you made at The Trust since joining?

Weiss: I think my staff would say sweeping changes. This place is clean, was always clean, and the trains ran on time. That’s what I was told, and that there wouldn’t be any need to make changes. But when I started here, I think my staff had PTSD from the prior leadership. I like to hear opinions; I like staff to be in the room; I like staff to speak first and then I’ll chime in. I believe I have a very different management style from my predecessors. I think that was the biggest change I brought.

Also, I saw that our system was really archaic and certain investment accounting methodologies were duplicative and inefficient. With my colleagues, we are changing a lot of those procedures. We are interviewing system providers to create a scalable system. Some programming will be done in house. The finance team is without a doubt the best I’ve worked with, and they are up to the challenges.

IA: How would you describe your management style?  

Weiss: I would say ‘empowering to my staff.’

IA: How would you characterize your investment philosophy?

Weiss: Steady as she goes—we’re here for the long term. We’re not risk averse, but we don’t make rapid changes based on market fluctuations or current trends.

IA: Have you made any interesting investment allocations recently?

Weiss: I think we did the right thing by exploring other investments for our hedge fund money. I think that hedge funds, in general, have run their course. The liquidity premium is absent. The investment committee is looking closely at private equity, natural resources and real estate.

IA: What’s your view on active vs. passive management? 

Weiss: About twenty five percent of our portfolio is passively invested. An important point with regard to active management is that it makes for more interesting investment committee meetings. The investment committee doesn’t want to get together for a sandwich and cup of coffee just to look at the performance of an S&P 500 fund. They enjoy meeting managers, getting to know managers—they enjoy debating managers. Performance aside, I expect that we’ll continue to invest with active managers.

IA: What’s your view on ESG?

CW: We exist to help the New York City region. Our investment portfolios are classic investment portfolios, with risk and return decisions. To date, we don’t have ESG entering into our investment portfolios. What we will do, however, and what we are having conversations with donors about is impact investing. We’re willing to work individually with donors to explore what they want to do. That is separate from our investing. I don’t think that’s inconsistent. Our investment committee brings a range of experience to our investment decisions. At this point in time, I don’t think anyone on the committee has expertise in ESG. That group of experts is our program team.

IA: What was your best experience in your career so far?

 Weiss: My international experiences are at the top. Any time I worked in South America for Deutsche Bank, or in Germany for KPMG, or speaking at a Markets Group meeting in Sao Paulo coming up [Market Group’s 10th Annual Private Equity Latin America Forum, Sao Paulo Dec. 3 – 4], that’s what I enjoy the most because I like different viewpoints. It’s a big world out there. I like to hear what is going on. When I spoke at a Markets Group meeting in Peru, we discussed investing in shopping malls. Because shopping malls are safe and secure—they are destinations. People go to shopping malls to hang out and to make purchases. That is something unique and location centric. In the United States, increasingly, a lot of shopping is done away from shopping malls. When I prepare for a speech or panel discussion, we convene with other investment professionals. It’s evident right away who is the chatty one, who is the technical one, who is most up to date on current events. You work it out—it’s about the group dynamic, not about my knowledge, per se.

IA: What was the worst experience in your career so far?

Weiss: The environment at Deutsche Bank could be tough. Think back to the culture of New York financial institutions in the 1990s. We had two female vice presidents out of a team of 38.

IA: What would you like to see changed in the investment industry?

Weiss: I’d like to see defined benefit (DB) plans continue. I understand that it is a commitment by a corporation, based on future unknowns. But the social investment DB plans offer is that staff members who either don’t save or can’t save—will be taken care of in their old age.

IA: What’s your next planned business trip?

Weiss: I travel tonight to Napa Valley to visit the vineyards. I’m travelling with Markets Group, in December, to the Latin American private equity conference. For personal travel, I went to Croatia in August and Sweden in June. We have friends in Sweden who work for the Swedish government. It was our 34th wedding anniversary, and we wanted to do something special to celebrate. There were long days—we would picnic at a park until 10 pm with other families.

IA: What are your hobbies?

Weiss: The same as yours: talking to people.

IA: What was the last book you read?

Weiss: Ego vs. EQ by Jen Shirkani. It’s good. You have to watch out for ego traps—watch out for ‘am I being a micro manager?’ The author suggests that one think about hiring people who are not identical to themselves. As a matter of fact, hire those who are opposite to you, because they will fill in the gaps. It’s a good refresher.

Editors’ note:  Carolyn Weiss is a member of Market Group’s Advisory Board

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