February 14, 2002
Students Compel Williams College to Offer Social Investment Option for Donors
by William Baue
Alumni and other donors now can have their endowment contributions invested in a socially
Liberal arts institutions often teach the ideals of social justice and environmental responsibility
in the classroom. In the boardroom, however, trustees often ignore the social and environmental
implications of school endownment investments. Students at Williams College in Williamstown, Massachusetts recently tried
to erase this incongruity by establishing a socially responsible investment fund for donors to the
school. After initial resistance, the college implemented a social investment option as a
component of its $1.207 billion endowment, allowing alumni to earmark contributions for socially
In the spring of 2000, Williams undergraduates organized a
month-long series of events to draw attention to pressing social and environmental issues. Chuck
Matthei, president of Equity Trust Inc. and a
speaker on community land trust issues at the series, became an advisor to the students on socially
responsible investing as well. Some students, who wanted their senior class gift to be invested
using social and environmental criteria, expressed frustration at the school's unwillingness to
consider any such investment criteria.
The students told Mr. Matthei that they were less
inclined to support the college with donations if the school refused to address socially
responsible investing. They asked if they could put money in escrow until the college came to
terms with the issue. Mr. Matthei replied that it would be possible to do that if there was a
cooperating non-profit with intermediary capacities.
The student group proceeded to set up
the so-called Williams 2000 fund, whereby a qualified 501 (c) (3) non-profit would accept
contributions and invest them in a socially responsible manner. Contributors could receive their
tax deduction, just as they would for donating to the college. The student group chose to invest
through the Equity Trust Fund, which would donate earnings to Williams once a year. However, the
fund would retain the principal until the college agreed to invest the money using socially
responsible investment criteria.
"The development office just went ballistic, picking up
the phone with the students and saying 'What the hell are you doing? You can't do this!' And of
course they could do it--they were doing it," Mr. Matthei said. "The control of the process had
shifted completely. Psychologically, it meant the college no longer had the luxury to stonewall.
They could either come up with a reasonable program or risk losing potential donors and losing face
and losing relationships and losing money," Mr. Matthei said.
To get the ball rolling,
students raised $1,500 and Equity Trust Fund invested it in community development loans until the
Williams College trustees decided on a social investment option. The trustees decided to invest
what it called the "Social Choice Fund" in the Calvert Group's Social Investment Balanced Fund. The
trustees have agreed that when the Social Choice Fund reaches $10,000, it will invest ten percent
of its holdings in a community development loan fund specifically geared toward supporting the
Berkshires, the region that encompasses Williams College.
"What's been done here can be
replicated at many other places," said Mark Reinhardt, an Associate Professor of Political Science
at Williams. "That Williams College, a pillar of the Yankee establishment, has taken this step
makes it harder to dismiss efforts at other colleges as romantic or unrealistic. Furthermore, on
the technical details, there's now a model to follow."
Williams announced the availability
of the Social Choice Fund in its Alumni Review, and it will also publicize the option during
reunions, which typically result in the highest donation activity, according to Williams Director
of Public Affairs Jim Kolesar.
The students involved in the initiative are hoping that
their success will ripple beyond the college campus.
"This option may very well encourage
some alums to consider socially responsible investing with their own portfolios," said Daniel
Shearer, a sophomore at Williams.