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“Afterwards,” recalls Grefenstette, “Bill said, ‘Great story! Love what you’re doing, but I have a rule that I don’t invest in first-time funds. I wish you great success. Let’s have lunch sometime to talk further.’” Despite the “courteous no,” Grefenstette never expected to hear from him again. But a few weeks later, a lunch invitation arrived.

They met every few months thereafter to discuss the markets, portfolio management, and the best opportunities globally for private equity investment. Along the way, their relationship grew. At one of those luncheons in 2006, Grefenstette told Dietrich he was planning to wind down his fund. Dietrich, who was then chair of Carnegie Mellon’s Investment Committee, mentioned that the university was conducting a search for a chief investment officer and treasurer; he encouraged Grefenstette to apply. He did. Months later, he had the job, and the two worked together closely because Dietrich exults in being an active trustee. Although he isn’t an alumnus, he proudly says the institution reminds him of his own “can-do spirit and multidisciplinary approach to problem-solving.”

As for his elevator comment that he wouldn’t have any bad days except for health, it came into play in 2009, when his doctors saw a shadow on his gallbladder; it turned out to be cancerous. He underwent an operation, and doctors told him they thought they “got it all.” But the illness made him think about the trust’s future. He began putting together the pieces, starting with Grefenstette.

“Bill approached me in 2010,” recalls Grefenstette. “He wanted me to become his chief investment officer and ‘designated successor’ as he likes to say.” The offer was too good to refuse. He told Jared Cohon, the university’s president, about his decision but reassured him. “I’ll still be pulling the oars for CMU; I’ll just be wearing a different jersey.”

He wasn’t kidding, considering the plan in place. Upon Dietrich’s death, the trust money will go into The Dietrich Foundation. There will then be a 3%-4% annual asset distribution to pre-identified beneficiaries. By far, the largest beneficiary is Carnegie Mellon, which is planned to receive 53% of the annual distributions from the foundation. It’s stipulated that those annual distributions will go into the university’s endowment, from which the university will be permitted to draw 5% annually. The disciplined structure of the gift has a double impact that is designed to ensure compounding returns for generations to come:

• Each year, under Grefenstette’s guidance, the foundation’s assets are expected to grow in excess of its annual distributions, which means more sizable distributions to CMU over time.
• Each year, the university’s endowment is also expected to grow from its own investment returns and from new distributions from the foundation, meaning larger annual draws for the university to use.

“It’s classic long-term planning by Bill,” notes Grefenstette.

Currently, the trust’s assets are valued at approximately $500 million, thanks to Dietrich’s prowess at long-term, thematic investing. That places the estimated value of Dietrich’s planned gift to Carnegie Mellon at $265 million; it’s the largest gift in the university’s history and one of the 10 largest ever by an individual to a private higher education institution in the United States.

As part of the plan, Dietrich tapped Mark Laskow to be chairman of the board of what will become The Dietrich Foundation. The two met while serving on a civic board together. The investment manager understands why Dietrich picked the university as the primary benefactor: “My son [Thomas Laskow (HS’07)] graduated from CMU with a degree in creative writing. He’s now in medical school. And I think that says it all—a university that turns out creative writing students but broadens them to the extent where they’re capable of doing well in medical school. A gift that benefits that kind of activity has got to be a good thing.”

And, in fact, specific support from the endowment gift will go to what is now renamed the Marianna Brown Dietrich College of Humanities and Social Sciences. Like Dietrich’s rise over the decades, so, too, has that college excelled. Faculty members have received numerous international awards, and SAT scores of admitted freshmen have increased a remarkable 12% in the past 20 years. Dietrich chose to name the college after his late mother to honor her unconditional love.

The gift comes during the university’s $1 billion Inspire Innovation fundraising campaign. “Bill’s gift is sort of a Good Housekeeping Seal of Approval to people of all means—it speaks to the safety and merit of investing in this institution,” says Robbee Kosak, the university’s vice president of advancement and chief fundraiser.

Under normal circumstances, learning of such a gift would have elated President Cohon. But the circumstances weren’t normal. In fall 2010, he went to visit Dietrich, who was no longer living at his home. The cancer had returned, and doctors told him after he underwent a 12-hour operation that nothing more could be done. He was living in a hospice.

(Continued …)

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