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
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.
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  educational institutions differ markedly, as do their endowment holdings disclosure
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 SocialFunds.com. "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
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 SocialFunds.com.
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
"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