Tufts behind on endowment transparency

    This is the first article in a two-part series examining endowment transparency at other colleges and universities. The first part will examine what other schools are doing to enhance financial openness. The second part, which will be printed in Monday's paper, will discuss the pros and cons of allowing student involvement in investment decisions.
    Some say that ignorance is bliss, but when it comes to a university's investment and endowment situation, some agree that students have the right and responsibility to play an active role in their school's financial decisions. Student participation in these choices is quickly becoming a reality at peer universities all over the country, including Harvard University, Yale University, Columbia University, Swarthmore College, Amherst College and Williams College.
    "From a transparency perspective, Tufts is very much behind, but if schools like Columbia and Williams have found that [this type of transparency] is not a problem, then Tufts should be able to do it," Morgan Simon, Swarthmore alumnus and founder of the Responsible Endowments Coalition, told the Daily. "Essentially, it's about accountability — colleges and universities who are bound to follow their mission statement. It's important for anyone from the college community to ensure that the school is following its values. More and more, it's becoming the norm for a school to [disclose] its investments to the school community through a password-protected Web site."
    In 2007, Tufts received an F in endowment transparency and shareholder engagement on the College Sustainability Report Card. According to the report card, released by the Sustainable Endowments Institute, the mark was the result of the confidentiality of Tufts' proxy-vote record and the fact that its list of endowment holdings is available to investment committee members only.
    Gabe Frumkin, junior and student chairman of the Tufts Advisory Committee for Shareholder Responsibility (ACSR), believes that this can and must change.
    "The university can make some parts of the endowment transparent in ways that would protect the security of the investment strategy, which has been done at other … peer institutions," he said. "Enabling this responsible transparency would allow interested community members the opportunity to know more about a part of the university of which they are normally ignorant."
    This year, Tufts fared slightly better on the report card with a C in endowment transparency. But Frumkin believes that the boost is undeserved.
    "To be honest, I think Tufts received a C erroneously … In the explanation of the grade, [the Sustainable Endowments Institute] explains that Tufts makes a proxy-voting record available to the university community on a password-protected Web site. This is false; no such information is available to the university community, and the ACSR struggled to find out that same information last fall," he said.
    There are deeper problems with the Tufts transparency policy than just the dearth of information publicized within the community, though. Tufts' financial policies seem to be directly at odds with its goals as an institution that promotes active citizenship and student engagement.
    "Financial transparency is about democratization," Alissa Ayden, a sophomore at Amherst and chair of its Advisory Committee on Socially Responsible Investing (ACSRI), said. "Every single member of a college or university community has a stake in the endowment. The students' educations are made possible by the endowment, workers and professors are paid by the endowment, and alumni and even current university community members pay into it directly. Financial transparency says knowledge is power and everyone should have some. If the status of the endowment affects everyone, how come only a small number of people actually know what is going on with it?"
    Ayden explained that, aside from democratizing knowledge, the main reasons for endowment transparency are practical.
    "If we don't know what our investments are, there is no way we can be engaged shareholders," she said.
    Many other Northeast schools utilize students like Ayden, who form committees that advise the university on socially responsible investment decisions. According to Simon, students research two things. First, they investigate how the school should vote on its shareholder resolutions and how it should use opportunities to engage with companies and improve practices. Second, they research proactive market-rate investment opportunities in green energy and low-income communities.
    Anne Murray, a student at Swarthmore College, explained her role as a student member of the Committee on Investor Responsibility.
    "I perform research and write recommendations on shareholder proposals," Murray, a sophomore, said. "As an investor, the college owns stock in many companies and has the right to vote on shareholder resolutions. Prior to the formation of the committee, the investment companies that manage our portfolio would vote on the college's behalf. That's still more or less the default."
    "Each year, [however], the committee selects a number of proposals related to various social issues that it feels are important to the mission of the college," she continued. "Student committees research both sides of the argument and also spend a lot of time looking into the college's history of involvement with the issue to determine where the values of the college community lie. We then write up a recommendation. The college's investment board votes on our recommendation and instructs the companies managing our investments on how to vote on the proposal."
    Amherst is enforcing similar policies. The Amherst ACSRI is in its first semester of operation and is made up of representative members of the college community, including faculty, staff, students and alumni. They advise the Board of Trustees on how to vote on proxy resolutions that contain social, ethical and environmental issues. They also ensure that the entire college community can access online lists of all common stocks held directly by the college and the endowment's investment managers.
    In the future, the group is planning to hold town hall meetings once a semester, open to the entire college community, so that anyone can voice concerns about the school's investments.
    "We hope to increase our actions as active shareholders over time to include practices such as corporate letter-writing and maybe even co-filing or filing resolutions," Ayden said. "We will listen to the voices of the college community and use them to guide … our actions."
    Frumkin looks to such policies as a model for Tufts' future.
    "Tufts could turn to many of the 23 percent of the universities surveyed in the Sustainability Report Card that make their proxy voting records available to the community or to the 33 percent of universities surveyed that make lists of endowment holdings available to the public for inspiration or constructive direction," he said. "We do not need to invent a new process; we only need to find what is right from other schools and perfect it for ourselves."