On Wednesday, Student Union Senate passed a resolution in favor of more student input and responsible investing of the endowment.

The premises of the resolution stem in part from the discrepancy between the University’s mission statement and its board of trustees’ investing practices. The statement says that the University aims to “enable [students] to be useful members of a global society” and “to be an exemplary institution in our home community, St. Louis, as well as in the nation and the world,” and hold itself to the highest standards.

SU fails to see this mission playing a role in the University’s investment practices. 

“We want to make sure that we are not violating our mission statement and doing the best thing for us as a community…to be the best we can be,” junior Daniel Fishman, an SU senator and co-sponsor of the resolution, said. “We want to make sure the endowment is a positive investment.”

They fear that too much money is invested in socially irresponsible ways. Because the endowment is not transparent, it is impossible for anyone to know what exactly the University is investing in.

“Currently they could be investing in things that go against what the University stands for,” Fishman said, citing the University’s stance against tobacco and its potential to simultaneously be investing in tobacco companies. Students also worry that they could be investing in coal companies, especially with the CEOs of Peabody Energy and Ameren on the board of trustees. In order to try to rectify the potential discordance between the mission statement and investment policies, SU passed a resolution resolving that the mission statement applies to all areas of the University, including the Washington University Investment Management Company (WUIMC).

“[The resolution] keeps it an issue. It formally states SU’s policy on this issue and how students feel about the endowment,” Fishman said.

The resolution also urges WUIMC to adopt socially responsible investment policies similar to those of other peer institutions, such as Yale University, Columbia University, Duke University and Brown University.

These schools “have implemented policies allowing for greater student input on investment strategies and ensuring that investments are in harmony with stated institutional values without compromising returns,” according to the resolution.

According to Fishman, Walker has said that WUIMC will have a website up and running in the next two to three weeks. The website will contain basic asset allocation information. The board has agreed to put up this website ever since the formation of WUSET early in the academic year.

This summer, the board will be hiring a student to help research how socially responsible investing will affect returns.

SU and WUIMC will now be working together to figure out the best way to institutionalize student input in investing practices.

“[Walker] said they’re looking to research how these socially responsible investment policies and student involvement will affect the endowments’ rates of return,” Fishman said. “She doesn’t want to hurt the rate of return and neither does SU.”

(Erin Mitchell | Student Life)

On Oct. 28, Student Life published an article discussing the recently formed student group called Washington University Students for Endowment Transparency (WUSET), a “New student group pushing transparency in endowment.” WUSET, acting in support of a group known as the Responsible Endowments Coalition, has begun to gain recognition on campus, claiming it promotes “responsible” investments. While the purported pros of this organization make it seem as though this group of students is presenting the administration with a delicious candy apple, they fail to take into account that—caramel coating aside—their idea is filled with worms. WUSET is bad. Let’s talk about why.

The most important question to ask is, what exactly constitutes a “responsible” endowment? According to www.endowmentethics.org, such an endowment is one that “screen[s] out or divest[s] from particular investments, such as in tobacco…” Additionally, these endowments make “proactive investments in companies or projects that align with the institution’s mission, such as green energy or low-income housing…” Now I won’t say that green energy is a particularly bad investment or that tobacco is an especially good place to park endowment funds. But I will say that opening up the endowment to student opinion could have potentially serious consequences for the student body.

The endowment, according to the University’s Web site, is a collection of funds designated for such purposes as supporting “professorships, scholarships and fellowships, research, the libraries, teaching, curricular development, buildings and grounds, technology, and new or evolving academic programs.” In short, it provides money to support just about everything a university does. Endowments operate as giant pools of money that are invested; the returns from said investments are then used for the aforementioned purposes. If the University’s money is invested well, then it ought to reap a higher return. This translates into more spending on the part of the University to improve itself. Note that it also yields more financial aid for needy students.

I truly wonder why WUSET would push an agenda that severely limits the types of investments that the school can make. It seems strange that the betterment of the University could be put in jeopardy because the school may soon have to weed out putting its money in anything that could be construed as controversial. The University is very vocal about its politics, and if WUSET accomplishes its mission of endowment transparency, the University as a whole could be very much worse off.

I will not go as far to say that this notion of “responsible” investing is entirely bad and that the school should pour its money into blood-soaked African conflict diamonds. I only say that opening the endowment’s components up to scrutiny by a student body more concerned with myopic politics and less informed about investing is not the best idea. Take the following two investments as hypothetical examples: The Vanguard Consumer Staples ETF (NYSE: VDC) and Market Vectors Global Alternative Energy Trust (NYSE: GEX). In the past six months, one of these ETFs has risen 18.73 percent. The other has dropped 3.14 percent.

I’ll cut to the chase and say that the alternative energy investment is the one that dropped. But out of the two, it’s the only viable investment according to the Responsible Endowments Coalition. The consumer staples ETF, which puts its money in a well-rounded mix of companies whose products have relatively stable demand, invests 7.07 percent of its assets in Philip Morris International. Cigarettes, as noted above, are a no-no under the “responsible” endowment scheme.

I’ll respond to the supposed evidence in favor of a responsible endowment. The $150,000 Wesleyan Student Endowment, a “responsible” endowment, has outperformed the market. It now stands at $150,065.46, according to an article on the Responsible Endowments Coalition Web site. That’s annually a 0.04364 percent return. In the past year, Altria (another cigarette manufacturer) is up roughly 3 percent.

Call it irresponsible, but making money is what the endowment is supposed to do. Before the student body throws its support behind WUSET, I urge everyone to consider whether it’s worth potentially hindering our endowment’s future growth just to help a few misinformed and quixotic students sleep better.

Exactly how the University receives and manages its endowment has remained largely out of view, prompting frustrated students to band together to form a new group called Washington University Students for Endowment Transparency (WUSET).  The group is collaborating with Student Union to bring the issue of responsible and honest endowment investing to the forefront.

In 2007, the University formed a separate investment company called the Washington University Investment Management Company that manages all the endowment investments and reports to the board of trustees. Chief Investment Officer Kim Walker is the head of the company.

WUSET’s mission is to hold the University accountable for its investments and make sure that the investments uphold the values of the student body. Members of the group say the first step in doing this is to have the University disclose its endowment activities to the public.

“Whether [the University] is investing in an organic farm or, say, Boeing, investment decisions carry the weight of intrinsically supporting their business practices, and it’s important to know whether those practices are ethical or not,” said Molly Gott, sophomore and WUSET member.

A source of concern for WUSET is that many members of the board of trustees, which establishes policies for and oversees endowment investments, are also high-ranking officials of large corporations such as Boeing, Bank of America, Monsanto, Arch Coal, Ameren and Peabody Coal.  Without endowment transparency, students have no way of knowing the extent to which the University is invested in the companies of the board members and any conflicts of interest that are present.

Additionally, WUSET hopes that endowment transparency will encourage the University to invest in companies that are committed to creating positive influences on society, such as renewable energy firms.

WUSET’s efforts have included several students attending a recent conference sponsored by the Responsible Endowments Coalition (REC) at the University of Pennsylvania to learn more about endowment transparency and socially responsible investing.  The group plans to meet with Chief Investment Officer Kim Walker and work with the University administration to reach its goals.

Ideally, WUSET would like to realize a future where students, faculty and alumni can access financial records of the University’s endowment investments online.  Some universities such as Columbia and Brown have already achieved such transparency through their Web sites.

A relatively young group, WUSET’s members hope to create a committee composed of students, faculty and school officials who would have institutionalized power and the ability to vote on matters pertaining to endowment investment. The committee would be responsible for investigating the various investments and making sure that they reflect the principles of the wider University community.

Members have attended an SU-sponsored town hall meeting with Chancellor Wrighton in which endowment investing was addressed.

“As a group of concerned students, we look forward to working with the administration in order to improve the global impact of our considerable investments, giving the University community yet another reason to be proud of our University,” Gott said.