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Sustainable Philanthropy Case Study - Hewlett

Sustainable Philanthropy Case Study

Name: Hewlett Foundation

Type: Private Charitable Foundation

Size: $10.4 bn

Year of Establishment: 1966


With $10.4 billion in assets, Hewlett is one of the biggest foundations in the United States. The foundation awards grants to progressive causes such as education, environment, journalism, reproductive health, and global development. The foundation’s president is Larry Kramer, former dean of Stanford Law School. The foundation employs 120 staff members. On the investment side, the CIO is Ana Marshall. From 1993 to 2003, she served as a Senior Portfolio Manager of global and emerging market equity portfolios at RCM Capital Management. The foundation employed 12 investment professionals as of 2020.


The Hewlett Foundation was established in 1966 by Hewlett-Packard co-founder William R. Hewlett, his wife, Flora Lamson Hewlett, and their son, Walter Hewlett. The foundation was established in their Palo Alto home in California. As the foundation’s assets started to grow, the foundation started to hire employees beyond just the Hewlett family. In 2000, the year before Bill’s death, the foundation’s assets were around $4 billion. By the time that Bill’s assets had transferred to the foundation in 2006, the foundation had around $8.5 billion in assets.[1] Today, Hewlett Foundation is one of the largest philanthropic foundations. In 2016, the organization awarded around $400 million in grants.

Hewlett Foundation 2019 Report


The main mission of the Hewlett Foundation is to solve social and environmental problems at home and around the world. Currently, the foundation has six programs it makes grants to: education, environment, global development, performing arts, population, and philanthropy.[2]

Investment Program:

Investment Philosophy

Laurie Hoagland, former CIO of Hewlett, transformed the foundation’s investment approach. Hoagland joined Hewlett in 2001 after spending 9 years as president and CEO of Stanford Management Company, Stanford University’s $14 bn endowment manager.

According to Foundation and Endowment Investing: Philosophies and Strategies of Top Investors and Institutions, written by Larry Kochard and Cathleen Rittereiser, Hoagland had to deal with the death of founder Bill Hewlett two weeks after he joined the organization. At that time, 61% of portfolio was invested in Hewlett Packard and Agilent stock, so he decided to implement a plan to diversify the assets and only 5% of the foundation’s assets should be allocated to HP and Agilent stock. Since 2001, HP had a number of corporate events, including its merger with Compaq in 2002, acquisition of EDS in 2008 and spinoff of Hewlett Packard Enterprise. After all, the decision to divest the HP shares was in favour of the Foundation as the share price of HP, Inc. (successor company of the main computer and printer businesses) has increased a little.

The 2016 annual report from the foundation highlights the following strategy:

“The investment goal of the Foundation is to maintain or grow its asset size and spending power in real (inflation adjusted) terms with risk at a level appropriate to the Foundation’s program objectives. The Foundation diversifies its investments among various financial instruments and asset categories, and uses multiple investment strategies. As a general practice, except for certain index swaps, all financial assets of the Foundation are managed by external investment management firms selected by the Foundation.”

Thus, the foundation has adopted a strategy of using external managers and investing in alternative assets, a strategy to that of Yale’s.


Since 2007, the fund’s annualized return has been around 7.03%. The foundation experienced a significant losses (-28%) in 2008. It took three years before the Foundation recovered the high water mark of 2007. However, Yale Investment Office outperformed than Hewlett.

Asset Allocation

It is best to quote Foundation and Endowment Investment to explain the developments of Hewlett Foundation’s portfolio construction (we highly recommend everybody should buy and read the book):

Hoagland became CIO of Hewlett in 2001 but had been involved in managing the endowment since 1995, when he joined Hewlett’s investment committee. His experiences with Hewlett give an excellent view of his portfolio construction process.

When he first joined the committee in 1995, the foundation had recently established its first allocation to alternative investments representing 20 percent of the portfolio. The committee hired the consulting firm Cambridge Associates to research and select the managers.

“Private equity, real estate, and absolute return—the allocation took several years to build. That program was phenomenally successful. I would have said starting then that they were too late to catch the venture capital curve, but they did.”

When he joined Hewlett in 2001, recently harvested venture profits were $1 billion of a $3 billion portfolio. In two of their first three venture investments, they had invested $6.8 million in one fund and $10 million in another. Both firms returned a quarter of a billion dollars a piece. They made those investments in well-known firms that would not normally have taken on a new investor. The Hewlett name gave them access.

The Hewlett portfolio remains a working progress. Since private equity was already a significant part of portfolio, he has mainly focused on building the allocations to absolute return and real assets. The real assets portfolio primarily consists of private real estate funds and natural resources. When he arrived at Hewlett, real assets made up 4 percent of the portfolio and now make up 12 to 13 percent of the portfolio, as mentioned in his discussion of asset allocation.

Manager Selection

A 2009 interview with the CIO Ana Marshall highlights Hewlett Foundation’s process for external manager selection:

“We regularly visit or call—and we’re always talking to—these outside money managers because we really view our work as a partnership… These are very seasoned people; we rarely go with a manager whom we haven’t known for years. It’s about personal integrity: a manager may say, “You know, I don’t think you should be in X investment right now,” even if it means taking money away from him. At the end of the day, we look at the quality of these relationships more than anything else. We either have our portfolio actively managed by people like this, who look at the fundamental values of stocks, or we’re invested in various indexes. The same thing is true in our fixed income investments, the bond portfolios.”[3]

In Foundation and Endowment Investing:

Regarding his criteria for selecting managers, Hoagland thinks David Swensen has the right approach and, like Swensen, tends not to invest with big institutions. He does admit to have brand biases and continues to invest with firms that he has gotten to know over long time periods.

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