The Board of Trustees last semester invested $500,000 of the university's operating cash into a community bank, a decision that promotes responsible sustainable investment, according to junior Caroline Incledon, president of Students at Tufts for Investment Responsibility (STIR).
The money that the university invested is not from the endowment, but it is part of the short-term cash that they invest in order to secure the money and gain interest on it, Executive Vice President Patricia Campbell said.
The Board of Trustees selected a community bank that met their standards and invested the money last semester, Campbell said.
"We're always looking for good places to deposit our cash so we can have it secure, as well as earning the best interest rates," she said.
Campbell did not specify the specific bank in which the university invested.
Two student groups, the Advisory Committee on Endowment Responsibility (ACER) — formerly the Advisory Committee on Shareholder Responsibility — and STIR both approached Campbell last semester suggesting that Tufts invest in a community bank, Incledon said.
ACER serves as an advisory committee on investment for the Board of Trustees, according to ACER President junior Kelsea Carlson.
Community investment is a sustainable banking method because it is locally beneficial, Martin Bourqui (LA '09), national organizer for the nonprofit Responsible Endowments Coalition, said.
"Many [community banks] have policies aimed specifically at, for example, supporting environmental projects or supporting small business growth," Bourqui said.
The Responsible Endowments Coalition, which works to raise awareness of responsible investment and help change universities' investments to make them more sustainable, approves Tufts' decision to invest in a community bank, Bourqui noted.
Community banks provide loans for low-income residents and small businesses, Incledon said. Community banks also work with people who were foreclosed out of their homes during the mortgage crisis, Bourqui said.
The risk of investing in a community bank is roughly the same as investing in a larger bank, Incledon added.
"Your money will be just as safe in a community bank, so why not invest it locally?" Incledon said.
Larger banking institutions don't consider the local community as much as community banks, according to both Incledon and Bourqui.
"I think a lot of people after the financial crisis have really been trying to look for alternatives to the major banks, partly considering the role that they played in causing the economic crisis," Bourqui said.
More community banks used to exist, Bourqui noted, but larger banks bought many of them.
"There are a few major players in the space that really have been driven by greed and a lot of poor decisions that have really caused a lot of problems for our economy," he said.
Carlson believes that it is important for universities to be as transparent as possible in their financial decisions.
"A lot of times, universities come under attack because their investments aren't always environmentally or socially responsible," Carlson said.
A university's investment choices inevitably have consequences, Bourqui said.
"Both individuals and big institutional investors like Tufts have the amazing opportunity to use their money, not only to save or to spend or to invest, but to actually help out those in need at the same time," he said. "I think that this community investment is definitely a step in the right direction."
He added that it was important for universities to consider the wide-reaching consequences and possible benefits of their investments, Bourqui said.
"All universities can and must be held accountable to not only the investment office but also the people that make up the broader community," he said.
According to Bourqui, responsible investment strategies will most likely become more popular in the future.
"As the responsible investment movement grows and develops, the issue of transparency is only going to get bigger and bigger," he said. "I see us as being in the early stages of a large, very meaningful movement."
He stressed the importance of awareness of responsible investment strategies within the Tufts community.
"We support students and people in general at universities across the country who are working to make universities' investments more in line with their missions," he said.
