University Business - September 2008 - (Page 45)

ENDOWMENT MANAGEMENT Taking a ofStake in decisions Campus Finances Spreading the power making investment By Ann C. Logue I N APRIL 2008, STUDENTS AT the University of Florida in Gainesville staged a hunger strike to protest the investment policies and lack of transparency for the campus’s $1.2 billion foundation endowment. It was dramatic if not exactly effective. Foundation trustees agreed to consider general social criteria along with financial criteria when making investment decisions. The protest was almost touchingly retro, because the new version of campus investment activism has students investigating proxy issues, campus financial officers considering ways to make money by investing in the community, and alumni activists questioning whether a university with a multi-billion-dollar endowment has less of investment strategy, says Morgan Simon, the coalition’s co-founder and executive director. (With some investment strategies, such as indexing, the university can’t sell a company without affecting the position. With others, such as hedge funds, the investment manager will probably not allow for detailed disclosure of all holdings but may pass along proxy statements.) “It’s such a clear win-win,” says Simon. Students can turn their activist energies into an educational experience by researching issues and writing recommendations for the trustees to follow. By voting according to their findings, the endowment can create social change while still honoring the responsibility of supporting the institution. Students can turn activist energies into an educational experience by writing recommendations for the trustees. an obligation to share the wealth. The Responsible Endowments Coalition, a network of student, faculty, and alumni groups on 65 campuses, lets campus stakeholders share information. It recommends that students work with administrators to develop shareholder campaigns. Every year, for every stock held by an endowment, the university receives a proxy statement that allows the endowment’s representative to cast a vote, based on policies established by the governing board, on matters such as board of directors members, certain types of compensation programs, and a range of shareholder proposals covering employment, environmental, and international business policies. These proxies can be voted regardThis arrangement is just one example of how colleges and universities are giving stakeholders a say in investments. DEMONSTRATING COMMUNITY COMMITMENT An endowment is just part of the campus’s financial assets, of course. Macalester College (Minn.) has long been committed to promoting growth in the Minneapolis and St. Paul communities. For example, an alumnus once pointed out that using a local bank would be a great way to show a local commitment. The college’s trustees knew that a small bank would not be able to handle all of the college’s needs, but Macalester’s treasury account had the luxury of a substantial cushion that could be kept on deposit. In 2007, leaders at the institution solicited bids from area banks to handle a $500,000 deposit. In addition to information on rates, security, and community investment, they asked for ideas on how the bank could work with the Macalester community. University National Bank won the bid. The bank is a designated community development financial institution, so its mission is to provide banking services to customers who might not be attractive to larger banks. It uses deposits to fund small businesses and community development projects, and it proved to be a good fit. “We certainly want St. Paul to be as strong as it could be,” says David Wheaton, vice president for administration and finance at Macalester. The bank created internships for the college’s students and sends officers to campus to give guest lectures. Students have performed class projects with the bank, developing guidelines for green real estate development and investigating the economics of a neighborhood microlending program. University Bank installed ATMs on campus and markets its checking account services to students. “It is a way for us to make a richer arrangement than just an arms-length depository arrangement,” Wheaton says. ALUMNI INVESTMENT PUSH Alumni don’t just advocate; they have the power of the purse. Many are pushing for their donations to be invested in socially responsible ways. At Williams College (Mass.), alumni formed their own investment fund, the Williams Social Choice Fund. Launched by the class of 2000, the fund is part of the university endowment universitybusiness.com September 2008 | 45 http://universitybusiness.com

Table of Contents for the Digital Edition of University Business - September 2008

University Business - September 2008
Contents
College Index
Company Index
Advisory Board
Editor's Note
Behind the News
Sense of Place
Viewpoint
Human Resources
A Virtual Visit Welcome
Development Directors Speak Out
NACUBO in the Windy City
Facilities Focus
Money Matters
Financial Aid
Endowment Management
Marketing
What's New
End Note

University Business - September 2008