This is the second installment in a two-part series examining endowment transparency at other colleges and universities. The first part, which was printed in Friday's paper, examined what other schools have done and are doing to open up the investment process to students. Today's article will discuss the pros and cons of allowing student involvement in investment decisions.
Students often think of saving the world as taking a service trip to a third-world country, sponsoring a dance-a-thon to raise money for an organization or disadvantaged community or holding a human rights protest. Not everyone realizes that their university's endowment is another avenue for change. But students who serve on committees that advise their schools on socially responsible investing (SRI) have the power to alter the way companies do business and the way institutions approach investment policy.
Morgan Simon, co-founder and executive director of the Responsible Endowments Coalition, believes that as stakeholders in the endowment, students deserve a voice at the table.
"Investors have unique opportunities to influence corporate behavior and support the sorts of innovations for communities and the environment that society needs," Simon said. "As students looking to make a positive impact on the world, having access to a billion dollar endowment is a once in a lifetime opportunity."
Simon knows the benefits of this experience firsthand. In 2002, as an undergraduate at Swarthmore College, she led the filing of the first student-led shareholder resolution since the apartheid era and helped successfully convince Lockheed Martin to add sexual orientation to its non-discrimination policy and to grant domestic partner benefits. She has also led similarly successful efforts at FedEx, Dover and Masco.
By not engaging students in this process as much as other peer institutions, Tufts and its students may be missing out on opportunities to make positive change and learn about investment strategies' influence on corporate behavior, according to Alissa Ayden, sophomore and chair of Amherst's Advisory Committee on Socially Responsible Investing.
"Universities are ethical, educational institutions -- read any university mission statement -- it's about living out our ideals in the real world," Ayden said. "No matter how much good we do, if we are continually funding the corporations that commit crimes against humanity, the world and its inhabitants, we are undermining our own work."
She believes that encouraging open, socially responsible investing is necessary to keep up with the changing world.
"For a long time, investment has not been viewed in this way; there has been a division that deals with profit and socially responsible investing," she said. "The conventional wisdom says that SRI is antithetical to profit, but that is completely false. When it comes to long-term profitability and return, the companies that take environmental, social and governance issues into account fare much better than those that don't. Especially given the current state of the economy, corporate accountability is something that is on everybody's radar," she said.
Carmen Rose Duffy, investment associate at Swarthmore, agrees that student committees should keep colleges in check.
"The committees [at Swarthmore] were created as a learning process for the students, and [maintaining] transparency was to reassure them that our investments were ethical and responsible," Duffy said. "We didn't know that students were interested until they came to our door and asked how we do things. Transparency offered students an opportunity to learn about investor responsibility."
While these policies may look great on paper, one concern is that students are not qualified to be making such weighty financial decisions. While he believes that students may be capable of making some small investment decisions, Tufts Board of Trustees Vice Chair Peter Dolan fears that students are not qualified enough to understand larger investments.
"I don't think they have the expertise to do that, and we fortunately have alumni and trustees and donors who are actively involved in [those decisions]," he said.
Ayden agreed that students may not be financial experts, but she sees this as no reason to hinder their involvement.
"Students are absolutely qualified to make these decisions. When it comes down to it ... most people ... don't know what a proxy resolution is or what a private equity firm actually does or the difference between a mutual fund and a hedge fund," she said. "Engaging in responsible investing requires a sort of specialized knowledge that has nothing to do with intelligence, [but] one's ability to soak up, process, and utilize information -- everyone is capable of this, especially students who are passionate about the cause."
Anne Murray, a sophomore at Swarthmore College who is a member of the Committee on Investor Responsibility, explained that her role has allowed her to learn about many social issues, including those pertaining to human rights and the environment.
"I think socially responsible investment is an interesting way to engage in civic action because it's very different than the type of action that you normally see on college campuses," Murray said. "We aren't holding rallies or protests on these issues, but we still get to influence college policies. I truly believe that influencing the college to vote for a proposal that requires a company to make sure its foreign operations comply with a minimum set of human rights standards can be just as effective and important a form of social action as holding a fundraiser for a charity."
This type of student engagement could forge a new type of civic action, especially at a university like Tufts, where students have the potential and drive to make positive change.
Tufts currently has the Advisory Committee for Shareholder Responsibility (ACSR), which is intended to advise trustees on their proxy votes. ACSR members meet with Dolan and Executive Vice President Patricia Campbell.
Still, Gabe Frumkin, student chairman of the ACSR, believes that more needs to change in order for the organization to truly have a positive impact.
"As chairman of the ACSR, I know that our recommendations are presently not taken seriously, and that ... our existence does not translate to a greater sense of transparency or limited democracy related to the endowment," he said. "[The ACSR is] three undergraduates, not the more expansive committees that other universities have adopted and successfully used for years."
Frumkin sees this as holding back the community and believes that more transparency and student involvement could further dialogue on campus about a variety of social and environmental issues, provide an avenue for constructive discourse and active citizenship and urge alumni to donate.
"At the base of this is the lack of endowment transparency that makes Tufts appear less credible and competitive compared to peer universities in terms of working towards its educational and moral missions and values," Frumkin said. "While our investment priorities should be heralded as the positive steps that they are, the university administration, board of trustees and community should not be complacent when more impact can be made in the world."
Rob Silverblatt contributed reporting to this article.
