University endowments have been in the news frequently in recent months. In November 2008, the Tufts community learned in an e-mail from President Lawrence Bacow that the university's endowment value had fallen as a result of the recession. Later, we learned that Tufts, along with other institutions of higher learning, had fallen victim to Bernard Madoff's alleged Ponzi scheme, losing about $20 million, or two percent of its investment value. The most recent information that the community has access to is that Tufts is hurting; indeed, since President Bacow's e-mail last semester, the endowment has probably lost even more value, and it is not unreasonable to predict that things will get worse before they get better.
However, university endowments have made headlines in other ways in recent months as well. As reported in a Dec. 18 article in The New York Times, about 75 students occupied a dining hall at the New School in New York City, demanding, among other things, "more of a voice in school matters and full disclosure of the school's investments." Last month, students at New York University attracted national attention by occupying a cafeteria. Though their tactics and execution of the occupation were questionable and their goals loose and varied, the Times reported on Feb. 20 that central to their demands was a more "thorough annual reporting of the university's operating budget, expenditures and endowment".
Here at Tufts, members of Students at Tufts for Investment Responsibility have been the subjects of articles about their activism and have written op-eds on the subject of endowment transparency, accountability and responsibility. Nationwide, students are showing their concern about the management of their school's endowments, arguing that they should be managed in ways consistent with the environmental and social missions of universities, and not solely to turn a profit.
As one of the founding members and chairman of the Advisory Committee on Shareholder Responsibility (ACSR), I fully believe that the university can prosper only by maintaining a robust endowment, and I understand the moral and legal obligation that the Board of Trustees, operating as the fiduciaries of the endowment, have to work as stewards of the endowment to do what is in the best interest of their beloved school. ACSR is the group of undergraduate students that has access to information regarding the university's direct holdings in publicly-traded corporations and can write recommendations about voting on various proxy resolutions (which is the democratic right of a shareholder to guide certain aspects of how a corporation operates).
However, I also understand the frustration, anger and contempt that students and alumni have expressed in op-eds in recent weeks and that faculty members have shared with me privately. Why should a newly graduated alumna donate money to the Tufts endowment when she cannot play a role in determining where it is invested? For all she knows, a corporation in which Tufts is invested may be the same company that is causing the human rights abuses that she is attempting to eradicate by donating to Amnesty International. A current student, proud of the university for adopting the guidelines of the Kyoto Protocols, might be horrified to consider that the school owns a part of a company that actively opposes environmental protection legislation.
These two elements of our university's endowment -- the need to manage a vibrant endowment and the ability to manage it in ways that are aligned with the university's environmental and social values -- need not be separate issues with different advocates. Everyone at Tufts wants the endowment to prosper in the long term so that future generations of students can continue to reap the full benefits of this institution. Most of us also want the university to be consistent in how it acts on its moral values expressed in its vision statement. However, we can have our cake and eat it too; Barron's, The Financial Times and The Quarterly Journal of Economics, none of which are socially responsible investors, have claimed that investors can turn a profit with responsible investing techniques. The ACSR would not make recommendations about where Tufts invests; it only seeks a greater ability to make recommendations on the proxy resolutions concerning environmental or social issues that are important to Tufts community.
Some administrators and trustees of Tufts have said that Tufts cannot become more transparent or socially responsible, alleging that to do so would reduce our competitiveness or jeopardize our investment strategies. However, these claims misguide the community. They hide the fact that 34 other universities have committees similar to the ACSR, 24 of which focus almost exclusively on what we hope to accomplish. They also hide that other investors will not learn our investment strategies if the ACSR's requests are carried out, and that other investors will be neither interested nor surprised by what little information they learn. After all, what do Tufts investors know that Harvard, Williams or Goldman Sachs investors don't?
In recent weeks, the Tufts Community Union (TCU) Senate, the editorial board of The Tufts Daily and alumni have all acted to support the ACSR in its attempts to improve its ability to represent the values of the university. They understand the advantages that can come to students who participate in the ACSR, to the university from the increased dialogue that transparency could create and to the world from our urging progress in a variety of issues within a corporate framework. But they also understand the importance of a strong endowment, as evidenced by the creation of the Tufts Student Fund, the TCU Senate's decision to invest a portion of the recovered funds in the endowment and the Daily's support of increased growth. Most importantly, they understand that the two are not mutually exclusive, and that the university can become an example to institutional investors the world over. We are a school of aspiring global leaders, and I urge the Board of Trustees to lead the school in taking these steps.
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Gabe Frumkin is a junior majoring in peace and justice studies and International Relations. He is a founding member and chairman of the Tufts Advisory Committee on Shareholder Responsibility.
