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Students apply ethics to college endowments

Three current or former student activists in Massachusetts discuss how they influenced their schools to change their investing strategies.

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Pearson: That's typical, too, of many university campaigns. They ignore you or give you: "What's the return [or loss] on investment from divestment or doing community investment?..." And you just have to keep pushing and building your coalition.

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You've all succeeded with Sudan. But you want your universities to do more.

Pritchard: About three years ago now, we went to the trustees with a proposal to invest 1 percent of Mount Holyoke's endowment into community investment. The reason we decided on 1 percent is that we found out that 1 percent of our current endowment is invested in low-return investments. So we wanted to replace those low returns with a similar return in community investment. Well, the trustees weren't ready to do that, so they gave us permission to [raise funds] to build a trial fund. Right now, we have $25,000 in our trial fund, which will run three to four years. In that time we will invest in various socially-responsible avenues with a focus towards community investment and then come back to the trustees and prove to them that responsible investment is responsible socially and monetarily.

You got a lot of resistance, too?

Pritchard: At Mount Holyoke there was a lot of resistance, because Mount Holyoke did in fact divest from South Africa, and they ended up losing a lot of money because of that. So I think that because of the history of divestment from South Africa being so unprofitable, trustees are reluctant to engage in dialogue about responsible investment.

Is it ethical to limit their investment options? The endowment helps future students. The trustees have to be financially prudent.

Zainabadi: I absolutely agree. But if you ask people on campus – "Do you want future scholarships to come from blood money, to come from genocide, to come from environmental degradation?" – they'll say no. And I don't think it's a matter of you either be responsible and lose money or be irresponsible and make a lot of money. I think there's a very large gray area where you can [be profitable].

Twenty years from now, will we see real change in university endowments?

Pearson: I think we'll still be having these discussions.... I think there's always different things that are going to come up. The world's not a perfect place. And there are always going to be people trying to make money in ways that aren't exactly ethical. I can say, though, that I hope in 20 years these processes are more institutionalized with student involvement, faculty in­­volvement, and alumni involvement. So that instead of making mistakes and having to back out of them, they can be prevented from making mistakes, or only go into situations where they want to make a positive change.

Pritchard: My hope is that, working with the Responsible Endowments Coalition, in 20 years almost every university will have a committee on shareholder responsibility and will be engaging purposefully with their endowment. Because the reality is: Universities have these positive social missions. And so I think that it is, in the long run, beneficial to institutions to make sure that their endowments are in line with their social missions.