In 1979, Hampshire College became the first college in the United States to divest from South Africa as a protest against its brutal apartheid regime. The University of Massachusetts followed suit closely thereafter. It took Amherst College a little longer, but we too exercised our power to enact change in South Africa by divestment. Our own President, Tony Marx, is well known for his divestment activism as an undergrad at Wesleyan and Yale.
Three years ago, students at Amherst once again went on a divestment campaign – this time for Sudan over the genocide in Darfur. Students successfully petitioned President Marx and the Board of Trustees to free our endowment from Darfur blood.
This year, we’ve seen the introduction of a new campus campaign, coordinated by a group called the Amherst College Responsible Endowment Coalition (ACREC), which may or may not be the same thing as the Amherst College Endowment Transparency Coalition. The campaign, backed by at least 15 student groups on campus, has formed at least in part as a response to our dismal grade of “D” for endowment transparency from the Sustainable Endowment Institute’s 2008 Report Card. ACREC’s aim is, I think, firstly to enact greater endowment transparency. Ultimately, it would like to see the creation of a student/faculty/staff/administration committee to oversee the endowment.
I see the new campaign as a step in the natural progression of socially responsible investing at Amherst. And it is absolutely the correct step in the progression. I could write an essay on why it is crucial that we improve in this area, but Channing Jones ’09 has already written it and made the case perfectly. The Student editorial board is right on as well.
I’m going to add one note to both of these pieces. Rather than hurting our endowment, socially responsible investing could actually be positive for growth. I’m no expert, but it seems reasonable to believe that businesses with questionable human rights or environmental practices are likely to see selling pressure in the future, causing prices to drop. Thus, a failure to invest responsibly could prove detrimental not only to the College’s ethical standards but to its endowment growth as well.
There are really no serious arguments as to why our endowment should not have more transparency or shareholder engagement. I’d like to see our endowment information readily (and electronically) accessible to the College community by the end of next semester. By this time next year, I want to see the formation of a committee dedicated to endowment management.
President Marx – it is up to you to move the process along. The students are committed and united. With your support, we will be able to get approval from the Board of Trustees. I guarantee it.
Back in the late 1970’s, students campaigning for the divestment from South Africa made a promise. They declared that they would not give a cent to Amherst until it divested, at which point they would give freely [personal conversation, Ms. Sharon Miller ‘80].
This year, we’ve seen a record-setting 81% participation rate to the Senior Class Gift to the Annual Fund. This is a good thing – maybe we’ll have a shot in overtaking Williams for the top spot in the USNews rankings (their algorithm includes an alumni giving component), even if our socially responsible investing policies are worse.
I’d like to pose a challenge to the Class of 2009. If all of the student activism – responsible, respectful, and mature activism – goes nowhere, and there has been no progress by this time next year, take a page out of apartheid activists’ book. Don’t give a cent to the Annual Fund unless there are tangible improvements in endowment transparency by Spring Break.
I understand that the Annual Fund goes to campus needs and not to the general endowment. That’s fine. But we have a right to know how our College is invested. And withholding your donation will put serious pressure on the administration and Board of Trustees to make the progress happen.
Students, faculty, administration, staff, and the Board – let’s make a difference. We did it in South Africa. We are doing it in Sudan. It’s time for shareholder responsibility to become a permanent fixture at Amherst. Make it happen.
3 responses so far ↓
1 cliebersohn09 (cliebersohn09) // May 15, 2008 at 2:21 pm
dullman10,
I’m highly suspicious of any changes to Amherst’s endowment structure unless you can actually demonstrate a strong, good reason for it to change. Amherst getting a low grade on someone’s survey is obviously not a reason in itself for endowment reform. Pardon my ignorance, please - I’m not on campus this year, so I may have missed some important background information regarding this issue. If I have, please fill me in on it.
Obviously, as you suggest, institutional investors - like Amherst - always work closely with their portfolio managers to decide on their investments. Unless there is a good reason to believe otherwise, it’s best to assume that the college already has say over how its endowment is used.
And so I totally agree with Channing, the Editorial Board, and so on, that more *transparency* would be good. Or something along the lines of: given a list of companies that students don’t want them to invest in, guarantees be issued that Amherst not invest in those companies. As always with investments, telling people exactly what and where we invest would likely make our returns much lower (given how successful our investments have been so far).
And sure - let them release information on whether our fund managers have used their voting rights. But do you really think that the College has used its endowment to exert any control over the direction of companies? Like, the College is running its own PE company? That seems very, very unlikely.
If there is evidence that Amherst is investing in Sudanese companies, or arms dealers, or whatever, as you suggest, then obviously there is a need to stop that.
So we (sort of) agree on the transparency issue. Yet my real problem with these various on-campus organizations don’t want to stop at transparency, according to the information they have posted online. They seem to want to have direct,significant control over where the endowment goes. You even say that you don’t just want transparency, you want “to see the formation of a committee dedicated to endowment management.” Wow!
You suggest that more student control over the endowment might make returns increase. Markets are priced fairly efficiently so the estimated future costs of fuel (which are quite high - look at commodities futures!) are already included in the stock price.
And so I’m wondering: Have you ever tried your hand at portfolio management? How did it go for you? Most investors don’t outperform the market, and amateur ones lose money. The types of reforms that you are suggesting would bring shrink our endowment. I would much rather that we purchase $1.66bn of treasury bonds than that we form that committee.
The College has a duty not to support killings, genocide and so on. Beyond that, its primary duty is to educate students and to support professors’ research. Remember: we are not a charity, nor are we a lobbying group. So without any evidence to believe we are supporting these barbaric acts (and from what I hear, you have none), students should keep their hand out of the cookie jar.
Suppose that students one day *did* have a hand in picking investments. Which financial aid students would you pick to kick out?
Jack
PS: Out of curiousity - how did the Divest from Darfur thing go, like, did it have a serious effect on the actions of the Sudanese government? I’d be interested to see a follow-up article on the effects of its campaign somewhere.
2 Dave Ullman (dullman10) // May 15, 2008 at 3:15 pm
Hi Jack,
Thoughtful post. You make a number of good points - I’ll try to address them to the best of my ability.
I think that we agree on the transparency issue. Yet, at least twice you mention that I have no “evidence” of wrongdoing. I’m sure you see the contradiction here - how would I have evidence of endowment misuse if I cannot obtain information about how our College is invested?
Certainly the Committee is the more controversial proposal. Perhaps I was imprecise when I used the phrase “dedicated to endowment management” - I think that managing the endowment is a job for professionals, though I fail to see why there cannot be student input. Notice that I did not say this Committee would be a student-led group.
Nor do I think I ever suggested that “student control over the endowment” would increase returns. I simply cited a relevant article about the benefits of socially responsible investing.
In addition, you claim that “The types of reforms that you are suggesting would bring shrink our endowment.” This is a totally unsupported claim. I challenge you to find evidence that endowments at Harvard, Yale, or Williams suffered with the introduction of committees with student input. Also, the committee would not have control over $1.7bn. The way I understand it, the short-term accessible part of the endowment is much, much smaller. Thus, I disagree that the formation of the committee would have any effect whatsoever on the College’s ability to apportion financial aid (see Harvard U. once again).
If you really have doubts that students can make a difference, note that we only divested from South Africa a few decades ago and from Sudan recently with focused student campaigns. If the College works so closely with with the portfolio managers to decide on investments, why was it necessary for students to get involved?
It’s too early to tell whether divesting from Darfur will have any “serious effect” on the genocide; however, it has at least directed attention to the atrocities. You support it; I support it; let’s make sure that we continue to be responsible investors.
3 cliebersohn09 (cliebersohn09) // May 15, 2008 at 9:17 pm
Sounds good! I think we have converged on a point of agreement, or, more likely, we were already there and I didn’t realize it.
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