After decades of outsourcing, a private foundation is bringing its nearly $3 billion portfolio back in-house and rebuilding a new investment office..
The John S. and James L. Knight Foundation is putting together its investment team — its first since outsourcing its portfolio to Cambridge Associates in 2005. To lead the effort, Knight has hired private family office vets Rebecca Carland as its chief investment officer and Shanna Charles as director of investment operations.
In addition to Carland and Charles, the nonprofit is also looking to hire investment directors to cover private investments. In March, the foundation named Kevin Stephenson, who ran the portfolio between 2005 and 2019 at Cambridge — to its board.
“Building an in-house investment team allows us to manage our assets with greater strategic flexibility, ensuring that we continue to support Knight’s mission in perpetuity,” said Knight CEO Maribel Pérez Wadsworth.
A Knight spokesperson said the foundation — which funds programs promoting journalistic excellence, a free press, community service, and media and democracy research — decided to return to an internal team model to ensure its investments remain aligned with its strategic priorities. But it did not provide specific details regarding rebalancing the portfolio. Representatives from Cambridge declined to comment.
As CIO, Carland will oversee the foundation’s long-term growth and sustainability strategies. She was previously CIO at Builders Vision, a family office focused on impact investing. She also held senior roles at the Walton family office as well as Cambridge.
Charles was previously senior manager of investment operations at an ultra-high-net-worth private family office, where she helped build an in-house team alongside the CIO and president. Before that, she spent five years at Cambridge, where she played a key role in managing Knight’s portfolio during Stephenson’s tenure.
This marks the nonprofit’s first internal investment team since its former CIO, Timothy Crowe, retired in 2005 to start his own asset manager. Though Crowe delivered strong returns at Knight — outperforming the S&P 500 with lower volatility — the board rejected his proposal to have the new firm continue to manage the foundation’s investments and unexpectedly hired Cambridge. Knight’s portfolio was just under $2 billion when it handed the portfolio off to Cambridge in 2005. As of 2023, the portfolio had $2.6 billion in assets.
The Upsides to Insourcing
While small allocators moving their investment operations back in-house is not unheard of, it is uncommon, since most private foundations — 90 percent — opt for the OCIO model. This makes sense — building and maintaining an in-house, high-caliber investment team often requires scale. Plus, smaller and mid-sized foundations often outsource to tap investment expertise, get broader market access, and lower operational costs.
“It’s hard to justify an investment office for less than $5 billion,” Jim Scheinberg, founder at North Pier Search Consulting, told Institutional Investor. “The numbers just don’t make sense.”
Nonprofits with less than $1 billion typically use an OCIO until their portfolio reaches a certain threshold. However, Knight already had a $2 billion endowment managed by an in-house team prior to outsourcing. Now, they’re rebuilding a new office with family office investors.
Scheinberg explained that allocators typically return to insourcing if they think they have a substantial chance at getting “a leg up on these well-resourced organizations,” whether through specialized expertise, strong private market connections, or existing infrastructure. “They have to think they can do better,” he added.
However, some allocators and industry insiders have argued that internal CIOs are better suited than OCIOs to manage donor and board relationships, oversee operating budgets, and align investments with stakeholder values — tasks that external partners may struggle to handle.
“There’s so much more that an investment staff at a large institution does,” Brian Neale, chief investment officer for the University of Nebraska Foundation’s $2 billion endowment, told II in February. “There are a lot of things that we influence here that OCIOs aren’t best equipped to handle.”
Dennis Simmons, executive director for the Committee on Investment of Employee Benefit Assets, believe these shifts make sense, since the benefits of in-house management can often outweigh the downsides of outsourcing. He told II on Wednesday that “it’s not surprising that a foundation would find” it advantageous to have an internal team “with badges that swipe in every day” making decisions aligned with the long-term strategy rather than an OCIO making investment decisions with their products in mind.
“Ultimately, they have to answer to their donors,” Simmons said, adding that the foundation is still the fiduciary, regardless of where they outsource. “A lot of times that gets lost — as opposed to an in-house team that puts its fiduciary hat on every day.”