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March 31, 2005
Campus Activists and Alumni Donors Want Proxy Voting and Endowment Holdings Disclosure
    by William Baue

While some US colleges and universities are enhancing endowment transparency and engaging in socially responsible investment, most oppose disclosure and are also retreating from SRI.

Ever since the April 2004 launch of the Responsible Endowments Coalition, the issue of socially responsible investing (SRI) has gained increasing prominence on US campuses. The Coalition is a group of students, faculty, and alumni from 35 schools with combined endowments exceeding $102 billion. One reason the Coalition has made some headway is that it has honed its focus on transparency.

Instead of insisting that colleges employ SRI, Coalition members have adopted a more neutral stance. They are simply requesting disclosure of proxy voting records and endowment holdings, information necessary to assess and debate the degree to which current investment decisions are consistent with their schools' values and mission statements.

While the vast majority of schools are digging in their heels against proxy voting and endowment holdings disclosure, a few schools are complying.

"Recently, Dartmouth became the first school to publish its proxy voting record online for free and open public access in their Advisory Committee on Social Responsibility [ACIR] annual report," said Mark Orlowski, a Williams College graduate who co-founded the Coalition.

ACIR recommended voting in favor of 65 of the 94 shareowner resolutions filed on social and environmental issues.

"ACIR has also arranged for the Dartmouth community to have access to the list of the College's portfolio of publicly traded securities to be updated on a quarterly basis," the annual report states. "Any member of the Dartmouth community who wishes to review this list may do so by visiting the Office of Investments during normal business hours."

"To the best of ACIR's knowledge, only 11 other colleges and universities have mechanisms in place to review proxy resolutions or make recommendations regarding the voting of those resolutions, as well as to disclose endowment holding information to the public," the report continues. "The mechanisms used by the [11] educational institutions differ markedly, as do their endowment holdings disclosure policies."

These institutions include Barnard, Brown, Columbia, Duke, Harvard, Smith, Stanford, Swarthmore, Vassar, Williams, and Yale. For example, Columbia and Williams provide an annually updated list of endowment holdings; other schools are more forthcoming with proxy voting records while holding portfolio constituents closer to their chests.

"There is certainly an encouraging trend toward disclosure of proxy voting records by more universities," Mr. Orlowski told "It is difficult to predict whether the trend in proxy voting disclosure will lead to increased endowment holding disclosure."

This year, after almost five years of student campaigning, the University of Pennsylvania will start actively voting its proxies according to recommendations by the Social Responsibility Advisory Committee (SRAC). However, Penn does not disclose its endowment holdings.

"Insofar as opaque proxy voting records and endowment holdings avert difficult conversations, they might be seen to allow fund managers to do their jobs better--that is, so long as you define their jobs in a strictly financial sense," said Ryan Burg, a Penn doctoral candidate who also co-founded the Coalition. "Universities fear two things in disclosure: revelation of fund management strategy and politicization of endowed assets."

Indeed, college administrators have been quoted repeatedly in their school newspapers advancing these lines of reasoning.

"[To] divulge the specifics of its endowment investments . . . would put us at a competitive disadvantage," stated Boston College spokesperson Jack Dunn in the The Heights. "Our managers spend a great deal of time and money to find unique investments . . . it's like finding diamonds in the rough," said Penn Chief Investment Officer Kristin Gilbertson in the Daily Pennsylvanian.

However, such stances may put schools at odds with their alumni donors. A 2005 Goldman Sachs Global Markets Institute survey of more than 300 alumni who have donated more than $250 to their alma maters in the last five years found that three-quarters expect transparency, and almost half want their schools to employ SRI.

"Respondents cited their belief that endowment donors deserve to know how their contributions are being invested," the survey states. "Donors [also] believe making socially responsible investments is as important as seeking the highest possible returns."

Ironically, research shows schools moving in the opposite direction. The 2004 National Association of College and University Business Officers (NACUBO) Endowment Study of 741 institutions found investment managers' consideration of SRI on the decline over the last four years. In 2001, 38.6 percent of university investment management policies take SRI criteria into consideration on their own accord or when required by donors; in 2004, this number slipped to 27.6 percent, according to the study.

Why is social responsibility lowering on the radar screens of colleges at the precise time when the issue is being raised more vocally by students, faculty, and alumni?

"A number of factors could be contributing to this situation, most specifically the movement from 'traditional' investments like straight stocks and bonds to 'alternative' investments like hedge funds, which are more complicated," NACUBO Public Affairs Manager Damon Manetta told

Hedge funds, which now account for 7.5 percent of endowment assets, are also much more opaque than funds invested in publicly-traded securities, although the US Securities and Exchange Commission (SEC) is currently reevaluating hedge fund regulations.

"The holy grail of disclosure is that sought by students at Yale, Stanford, and other campuses working on the UnFarallon Campaign, which seeks full disclosure of certain private equities such as the Farallon hedge funds," said Mr. Burg of the Responsible Endowments Coalition. "While endowment disclosure of publicly-traded equities is on the horizon for some schools and extremely unlikely for others, the final step of disclosure of private equities and hedge funds is a long way off on most of our campuses."


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