At first glance, “nonprofit investment management firm” could look like an oxymoron, but Morgan Lewis alum Catherine Keating knows better than anyone else that that’s not the case. You won’t hear Catherine talking about her accolades, so we’ll fill you in: Among numerous other credits, notably, she has been named one of the Most Powerful Women in Banking by US Banker and one of the Most Powerful Women in Finance by American Banker, serving in leadership roles at JPMorgan Chase through the financial crisis and joining Commonfund in 2015 as CEO, accomplishing all of this in one of the most male-dominated industries in the country.

Catherine took some time to sit down with alumni relations to talk about her experience starting out as a lawyer at Morgan Lewis to her current role as CEO of an institutional asset management company with “.org” at the end of its website address.

As you cast your mind back to your time at Morgan Lewis, do any particular fond memories or influential mentors come to mind?

I have lots of memories, but something important to what I do now is that I had the privilege of working with just terrific clients. In particular, I had the privilege of working with Jack Bogle when he was the CEO of Vanguard, and Al West, the CEO of SEI. So I was working with heads of asset managers and I got interested in and intrigued by asset management. And I have been able to bring that experience and passion with me in my role at Commonfund.

At Morgan Lewis [in the Personal Law and Tax groups], I not only worked with great clients, I worked with great lawyers, of course. One of them in particular was Arthur Klein. He was a partner in the tax practice—a brilliant tax lawyer. He taught me an awful lot of discipline in thinking and in communication. He suffered from cancer for several years while I was an associate and, sadly, he died at a young age. Among the gifts he left me was confidence, in that he allowed me to handle his practice while he was away for various treatments. It’s something I’ve kept with me all this time. I remind myself: you never know what young people are capable of until you try them! He tried me, and it really allowed me to shoulder responsibility and develop leadership skills years before I might have otherwise had the opportunity.

What is the history of Commonfund? What is the focus of your current role as President and CEO?

We were founded in 1971, and I am the company’s fifth CEO. It’s hard to imagine today in light of how sophisticated investing has become, but as recently as the early 1970s, many endowed nonprofit institutions invested primarily in bonds—not a sustainable manner. Nonprofits face two challenges: Sustaining themselves in perpetuity—in other words a very, very long time horizon—while supporting ongoing operations that must be maintained through a business cycle. That means they must balance sustainability with maintainability—not an easy task.

In the early 1970s, The Ford Foundation, which at that time was a major funder of higher education in this country, began to look at that challenge and concluded that one of the great jewels of America, our higher education system, was not investing in a way that was going to sustain its mission over the long term. So, Ford decided to fund a study of optimal investment strategies for long-term investors, specifically educational endowments. Commonfund was an outgrowth of two landmark studies that literally reshaped institutional investment management. The Ford Foundation funded Commonfund with a $2.8 million grant, of which $500,000 was earmarked for research and education—a part of our heritage that remains central to our company.

Today, we continue to serve educational endowments, but we also serve other nonprofit institutional investors, such as museums, public service charities, hospitals, and retirement plans. That is one of the factors that makes Commonfund truly unique: our focus on nonprofit and public sector institutional investors. Another differentiating characteristic is our independence; we are not wedded to any particular style, strategy, or fund, but instead have the flexibility to independently source investment managers, without broader organizational constraints. Our long history and desirable client base often enable us to access otherwise unavailable managers and opportunities. The alignment and independence offered by this model of investing are central to our value proposition.

You served in various leadership roles at JPMorgan Chase during the financial crisis. What was that experience like, and did it inform your decision to move into a nonprofit space?

Not specifically. What I would say about the nonprofit and public sectors is that they have always been a part of my life personally. I grew up in the Washington DC area and had summer internships with the Federal Government. I was a scholarship kid myself; I went to a college that was generous enough to pay my tuition. I served on the Villanova board for 11 years, and I chaired it for a couple of years. As a whole, educational institutions are just a wonderful group of clients. I’m on the board of the Girl Scouts and I’m on the board of the InnerCity Scholarship Fund in New York, which is a fabulous organization here in the city. The nonprofit and public segments have always been very meaningful for me.

At JPMorgan, I had the experience of being a part of the firm when it acquired two institutions that were failing—Bear Stearns and Washington Mutual. Even one of those experiences impacts you forever, but two in the course of a year seared things into my consciousness as a businessperson, but also as an investor. I learned what causes a business to fail. It tends to be a combination of three things: concentration in your business model, leverage, and lack of liquidity. So what I took from that as a businessperson and an investor was that diversification is critically important, that you need to manage leverage, and you need to plan for having liquidity when you’re going to need it—which can be the very time when it is least accessible.

But what has also shaped me is the human impact—watching what happened to employees, to communities, and seeing the jobs and wealth that were destroyed…it just instilled in me a tremendous sense of responsibility for all of the people and constituencies that depend on you as a business leader and an investor.

Have there been any unexpected or major challenges since you took on your role at Commonfund?

For any business, your challenges are always your clients’ challenges. If I think about our clients, the challenge for them is understanding where we are in the market cycle. We are now late in one of the longest recovery/expansion cycles since the civil war. We believe this market cycle has room to run for another year or more, but expect lower returns and higher volatility in coming years. We have to counsel our clients to be prepared for that possibility, and to preserve the balance of maintainability (through the business cycle) and sustainability (over the long term).

The other change we have to prepare for is a different interest rate regime. It has been 35 years since we’ve been in a prolonged cycle of rising interest rates. Now we need to think about rising rates in the United States—and not only about the implications here, but for a world that is far, far more global than it was 35 years ago. So, those are two challenges we are thinking about for clients right now.

For an organization that’s on the cusp of its 45th anniversary year, we’re always thinking about how to take the disciplines that served us well in the past but continue to evolve and be relevant to our clients now and in the future. For example, I mentioned endowments’ historic over-allocation to fixed income investments. Commonfund was one of the creators of, and is still a major proponent of, what is called “the endowment model.” This approach is characterized by an equity bias, broad diversification, and lower liquidity in return for potentially better results over the long-term. We believe this is the kind of thinking that will sustain institutions through time. So, in many different ways, we are engaged in self-examination to make sure we remain strong and resilient and a valued resource for our clients.

You were named one of the Most Powerful Women in Banking by US Banker and one of the Most Powerful Women in Finance by American Banker. What are your thoughts on receiving such accolades and your role as a woman in such a historically male-dominated industry?

I don’t think about the accolades, but I do think about diversity and the role of women in financial services. The data is very clear today that diverse teams make better decisions and diverse leadership teams drive better business results and shareholder value. So what I really care about is having diversity and many women in the industry—because I think it’s going to drive better results for our clients.

We have two diversity issues in our industry. One is a pipeline issue: We just don’t have as many women trying to enter the industry as men, and that trend was exacerbated following the financial crisis. So we really have to work on the pipeline to have women attracted to this field, educated for this field, and then trained to succeed once they arrive. The second thing is promotions, because in our industry, we see a pyramid with more women at the bottom and many fewer at the top. So we really have to think about promotions and how we are not only attracting women, but promoting them.

What type of culture do you try to foster at Commonfund?

First and foremost, a culture of integrity. Coming into work in the morning and doing the right thing by our clients is critical. The money we invest does not belong to us, it belongs to our clients, and it is essential to their missions. Doing the right thing, even when it’s not the easy thing. Being prudent and honest. Those are core values for us. The second thing Commonfund has always stood for, and what I want it to continue to stand for, is independent thinking. Finally, I would observe that Commonfund was founded in an era of great innovation in the investment industry, and innovation is in our DNA. We were the first to develop the endowment model, we were among the early investors in international equity markets, we pioneered private capital investing for the nonprofit sector. We want to preserve that culture of innovation, but practice what I call “responsible innovation” because, as a fiduciary, we recognize that it’s not our money.

What do you do for fun?

My husband is also an attorney, so we’ve had two careers and two kids together all these years, which has been great. Our kids are older now, so we have a “semi-empty nest” depending on college schedules. So we’re spending more time traveling and entertaining, and I like to read. Last year, we saw every movie that was nominated for “Best Picture.” And we live in New York, so of course we go to the theater frequently!

Thanks for taking the time to talk with us.

Anything for Jami McKeon! She is one of the people who recruited me out of law school.