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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 responsible manner.

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 responsible investing.

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.


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