Formation of MEMCO
Oklahoma State University Foundation Authorizes Formation of Nonprofit Investment Management Company
The Oklahoma State University Foundation has authorized the formation of Multilateral Endowment Management Company (MEMCO), a not-for-profit investment management company dedicated solely to providing investment advisory services to the OSU Foundation, affiliated non-profits, and non-affiliated charitable endowments and foundations.
Since its inception in 2012, the OSU Foundation’s internal investment office has far exceeded benchmarks, delivering over $100 million of outperformance through active management.
According to Ryan Tidwell, chief investment officer of the OSU Foundation, “After seven years of strong execution, the establishment of an investment management company is the next step in the evolution of our investment office. Establishing MEMCO will maximize our ability to achieve our vision, which is to be a leading investment function and a benchmark for institutional investing in the central United States.”
Tidwell will become the CEO and CIO of MEMCO. The current investment team at the OSU Foundation will become employees of MEMCO at launch. This includes five investment professionals and three operations professionals.
A successful fundraising campaign and strong investment performance have enabled the OSU Foundation to grow its investment portfolio from less than $500 million to over $900 million. Even so, greater scale would allow the OSU Foundation to: (1) negotiate preferential fees and terms with investment managers, improving underlying portfolio returns; (2) recruit and retain top investment talent, ensuring long-term continuity of the process and team; and (3) spread fixed investment expenses across a larger asset base, reducing costs on a percentage basis. MEMCO provides charitable organizations like the OSU Foundation the opportunity to experience these benefits, while also providing a more efficient governance structure.
Unlike traditional Outsourced Chief Investment Officers (OCIOs), who utilize their clients as profit centers, MEMCO’s supported organizations will benefit from true alignment, sharing actual investment expenses on a pro rata basis. As a result, as MEMCO adds new supported organizations, investment expenses will decrease for all supported organizations. Furthermore, unlike traditional OCIO clients, who have limited supervisory authority, MEMCO’s supported organizations will receive representation on the company’s governing body, providing unparalleled transparency into and oversight of the investment process.
The Oklahoma State University Foundation and The McKnight Center for the Performing Arts at Oklahoma State University, who collectively represent about $1 billion in assets, have agreed to become MEMCO’s first supported organizations.
Kirk Jewell, president of the OSU Foundation, explained, “Our relationship with MEMCO provides numerous advantages, including a streamlined governance structure, increased stability of the investment team and process, and the opportunity to benefit from greater scale in the form of better terms and lower fees. This is the next logical step in becoming a top-performing investment operation.”
Ross McKnight, chairman of The McKnight Center board, noted, “MEMCO allows us to benefit from institutional-quality resources and access to investment talent that is typically not available to charitable organizations of our size, at a significantly reduced cost. This will benefit OSU, the OSU Foundation, and The McKnight Center Foundation, as well as other non-profits that may choose to join us in this endeavor.”
Thanks to MEMCO’s cost-sharing structure, the OSU Foundation and The McKnight Center — along with future supported organizations — can expect to see their investment advisory expenses decline significantly over the long-term.
For questions, please contact:
Ryan Tidwell, CAIA | firstname.lastname@example.org
Current CIO of the OSU Foundation
Future CEO and CIO, Multilateral Endowment Management Company
MEMCO – True Alignment. Expected Returns.