North Forty: Managing Liquidity through Change

This case explores the interaction between spending and investment decisions at a family office, specifically the family office of Jeff and Tricia Raikes, with special emphasis on the management of spending, portfolio investments, and asset liquidity in the presence of portfolio concentration on illiquid assets. The case is a follow up case to the 2017 HBS Case 218-036 “North Forty: Managing a Microsoft Family Office,” which focused on the family decisions on how to invest their assets to fund their spending needs (inclusive of taxes) and the family’s philanthropical goals through their non-perpetual foundation, and how to time and size asset transfers to the foundation over time as to maximize the foundation’s impact while preserving their ability to fund their lifetime spending. In 2024, Jeff and Tricia Raikes are conducting are thorough revision of their financial plan, along with their family office chief investment officer, Tom Felker. This revision explores the projected spending of the household that owns the family office, including their personal spending, their tax obligations, their philanthropic commitments, and their investments in new companies (or startups), and the portfolio of investments on which the family relies to fund it. The purpose of this revision is to determine if the assets they hold and their composition are expected to be sufficient to fund those spending projections. The Raikes are interested in exploring whether the liquid assets would suffice to fund their spending. In light of that analysis, they need to consider decisions regarding the composition of the portfolio and its liquidity as well as decisions on future spending and transfers to the foundation.