June 14, 2005
Mount Holyoke First US College to Dedicate Fund Exclusively to Community Investment
by William Baue
While other schools have devoted some funds to community investment, this move by the
Massachusetts-based women's college sets precedent and may lead to its use of other SRI strategies.
In founding Mount Holyoke College (MHC) in
Massachusetts, Mary Lyons envisioned a physical design that would foster a sense of community, and
the 1837 Seminary Building did just that, combining student dormitory, teacher residences,
classrooms, library, and dining hall. While the gothic revival architecture of subsequent
structures may maintain campus cohesiveness, the buildings stand in stark contrast with those in
the surrounding community, decrepit Victorians in economically distressed neighborhoods in Holyoke
Over the past three years, MHC students have been working to
bridge the economic gap between the privileged campus and its disadvantaged surroundings by
introducing community investment (CI) into the school's portfolio. Community investment connects
investors with community development financial institutions (CDFIs), which typically offer slightly
below-market rates of return (between zero and four percent). These CDFIs then connect with
economically distressed communities (which are often overlooked by traditional financial
institutions), providing affordable housing and small business loans. Interestingly, CDFIs
typically enjoy lower default rates than their mainstream counterparts, in large part due to the
technical assistance and advising offered by CDFIs.
"Like many colleges, Mount Holyoke has
long grappled with the vast divide, economic and otherwise, between the campus and the surrounding
communities," said Rose Levine, a senior on the school's Socially Responsible Investment (SRI)
Committee. "We argue that not only would the community investment benefit the local communities
receiving loans, the college will have the benefit of greater interactions with the towns
surrounding our campus."
When the Student Coalition for Action (SCA--the group spearheading the SRI
initiative) first met with the school's Trustees in February 2003, the students proposed allocating
two percent of the endowment to socially screened funds and one percent to CI.
beginning of our campaign, I believe many board members and administrators were skeptical about the
viability of SRI," Ms. Levine told SocialFunds.com. "We often left meetings and presentations with
instructions to come back next time with more research and make a case."
They took up the
challenge and wrote a 36-page report in the spring of 2004, following
the Trustees' and administrators' advice to focus on community investment as the best starting
place for implementing SRI at MHC.
"After receiving the report and listening to our
arguments during meetings and conference calls, the Trustees and administrators have treated us
with a great deal of respect and have committed to giving SRI at MHC a chance," Ms. Levine said.
In December 2004, the Trustees approved the convening of an SRI committee of six to eight
students, one faculty member, and one representative each from the Development Office and the
Financial Services Office, to oversee the CI initiative. The Trustees proposed raising $50,000
from the college community (such as alumnae) to seed a trial investment to be reviewed after three
years for consideration of integrating community investment into the endowment portfolio.
Mount Holyoke is the first US college or university to establish a separate fund completely
dedicated to community investment, according to Mark Orlowski, executive director of the
Sustainable Endowments Institute, which researches university SRI.
"A few schools have put
a portion of their existing endowment into community investment, but do not offer a giving option
that is 100 percent community investment to alumni and other donors," Mr. Orlowski told
For example, Saint
Michael's College in Vermont invests $150,000 in two CI programs (and another $100,000 in an
SRI fund), and Williams College allocates 10
percent of its Social
Choice Fund to CI, with the rest in the Calvert Social Balanced Fund (ticker: CSIFX).
Mount Holyoke's SRI Committee has identified three investment targets--Acción Springfield, the Institute for
Community Economics (ICE), and the Cooperative
Fund of New England (CFNE)--that
support distressed communities in Western Massachusetts. For example, CFNE provided start-up
capital to Nuestras Raices, a
community center in Holyoke, to set up El Jardin Bakery, which
provides much-needed jobs in Holyoke. This example also illustrates how financial and social
returns can coincide with educational returns, as eight Mount Holyoke students earned credit for
their Community-Based Learning (CBL) Politics course by
producing a promotional video for the bakery.
Since launching its fund drive last month,
the SRI Committee has raised more than $12,000 toward its $50,000 goal. A donor prospectus is
available from Mary Jo Maydew, Mount Holyoke's vice president for finance and administration.
"We believe we have a unique opportunity to make this institutional investment highly
successful and a model for other colleges and universities," Ms. Levine concluded.