Tufts Daily cartoon, February 5, 2009

Bard flexes shareholder muscle

Congratulations to Bard College for using their shareholder power to reduce McDonalds' pesticide use! Hopefully, Tufts will one day be leaders in this kind of bold and necessary action.

The Daily digs deeper into the endowment - do we have the 'expertise' to have a say?

A two-part Tufts Daily feature on endowment transparency - one published on Friday, and one today - investigate the necessity of community involvement in the endowment process, which is exactly what STIR is all about.

Friday's article is titled "Tufts Behind on Endowment Transparency." The money quote:

There are deeper problems with the Tufts transparency policy than just the dearth of information publicized within the community, though. Tufts’ financial policies seem to be directly at odds with its goals as an institution that promotes active citizenship and student engagement.

"Financial transparency is about democratization,” Alissa Ayden, a sophomore at Amherst and chair of its Advisory Committee on Socially Responsible Investing (ACSRI), said. “Every single member of a college or university community has a stake in the endowment. The students’ educations are made possible by the endowment, workers and professors are paid by the endowment, and alumni and even current university community members pay into it directly. Financial transparency says knowledge is power and everyone should have some. If the status of the endowment affects everyone, how come only a small number of people actually know what is going on with it?”

Ayden explained that, aside from democratizing knowledge, the main reasons for endowment transparency are practical.

“If we don’t know what our investments are, there is no way we can be engaged shareholders,” she said.

Today's article has some great coverage too, and illustrates perfectly the contrasting attitudes between Tufts and peer institutions:

Carmen Rose Duffy, investment associate at Swarthmore, agrees that student committees should keep colleges in check.

"The committees [at Swarthmore] were created as a learning process for the students, and [maintaining] transparency was to reassure them that our investments were ethical and responsible," Duffy said. "We didn't know that students were interested until they came to our door and asked how we do things. Transparency offered students an opportunity to learn about investor responsibility."

While these policies may look great on paper, one concern is that students are not qualified to be making such weighty financial decisions. While he believes that students may be capable of making some small investment decisions, Tufts Board of Trustees Vice Chair Peter Dolan fears that students are not qualified enough to understand larger investments.

"I don't think they have the expertise to do that, and we fortunately have alumni and trustees and donors who are actively involved in [those decisions]," he said.

In our opinion, Vice Chair Dolan's statement - and the somewhat misleading title, "Some administrators find students unqualified to handle investments" - imply that unqualified students are trying to take control of the endowment. But all that the ACSR does is offer nonbinding advice to the Board of Trustees - they have no actual power over our investments, and we are not advocating that they should.

If you have faith in our undergraduates, graduates, alumni, and faculty to show the professionalism to offer nonbinding advice to our Board of Trustees, then please join us and help us prove ourselves to the them. We put 100% of our faith in them; they should have more faith in us.

The art of giving

Danika Kleiber '02, chair of the alumni relations committee for our allies at the Tufts Progressive Alumni Network, has written a great op-ed that appeared in today's Daily that captures well the perspective of a growing number of alumni:

"...while I do wish Tufts well, I am going to withhold any direct donations to their coffers until they cough up some transparency and make a commitment to investing money in ways that make the world a brighter place, and I’m going to encourage other alumni to do the same. However, since I do sincerely believe that one of the best things about Tufts is its students, I’m going to use my hard-earned paycheck to support the Tufts Progressive Alumni Network (TPAN) Social Justice Fund ... That way I can still support the institution I love, but with the smug knowledge that my money will go to Tufts students working to make their school live up to its full potential."

The big push

Today's Daily article, "Groups petition to expand ACSR," is covering STIR's campus-wide push to raise awareness about making our ACSR bigger and better - with the help of the first unanimous TCU Senate resolution in two years.

STIR, a new student group that has formed to push for increased endowment transparency, and the Senate will officially present this argument to the administration today in a packet of information. It will include a STIR petition with 190 signatures and a resolution that the Senate passed on Sunday.

The Senate’s resolution follows up on a similar one that the body approved last spring, but to little avail.

“The TCU Senate urges the Board of Trustees and the Officers of Tufts University to allow the ACSR to undertake broader activities towards shareholder engagement, such as corporate dialogue, filing shareholder resolutions and increasing transparency in a way that will both protect the security of the endowment and permit greater community engagement,” Sunday’s resolution, which garnered unanimous support, read.

“I think that STIR is advocating for a really important cause on campus, and we’re going to help them as much as we can,” TCU President Duncan Pickard said.

The consensus: socially responsible investing is good for the pocketbook

Thanks Danielle for finding this great article from Worldchanging on the financial edge that social responsibility, transparency, and oversight bring to the investing process:

"SRI [Socially responsible investing] mutual funds have begun to outperform their "hard-headed" competitors. That's right, investing in doing good makes you more money. As Green Money Journal reports, 16 of the 21 funds with $100 million or more in assets "achieved the highest rankings for performance from either or both [financial analysts] Morningstar or Lipper," compared with only 32% of all mutual funds.

But here's the twist: it turns out that not only does SRI make investors more money - standards of transparency, accountability and social responsibility make corporations more money.

Some of this competitive advantage is due to the fact that environmental efficiency and good working conditions, while a hit to the short-term bottom line, often pay themselves back handsomely. Companies with the guts (and shareholder pressure) to make investments in sounder practices often do better than their short-term focused competitors at finding and implementing innovations as well.

But it's not all compact flourescent lightbulbs and childcare. Socially responsible businesses are also run better as businesses. And, it turns out, financial transparency (being honest and open with your books) and corporate democracy (allowing shareholders and even employees a strong voice in decision-making) are excellent predictors of both profitablity and shareholder return."

The article cites articles by Barron's and the Quarterly Journal of Economics that aren't available online, but to read more about the profit advantage of investing right, you check out our earlier post on the Financial Times's coverage of this new awareness.

Thank you TPAN!

Everyone at STIR would like to give a big thank you to the Tufts Progressive Alumni Network for their support. TPAN and STIR are natural allies, both working to support progressive causes at Tufts and to influence university policy. But TPAN's quick responsiveness to our call for help, adding their names on our petition, and allowing us to use their precious front page real estate for our cause have all really helped us take the movement to the next level.

So to Eva, Danika, Louis, Doug, and everyone at TPAN, a great big thank you from Students at Tufts for Investment Responsibility on behalf of everyone who wants to bring change to our endowment's investment policies. Seniors and alumni looking to network, share resources, and help continue to bring about change at Tufts, please take note.

PLEASE SIGN OUR PETITION!

Our petition to the Tufts administration and the Board of Trustees, in support of the full, restored Advisory Committee on Shareholder Responsibility, is online!

Please click on the link above and show your solidarity by adding your name to the list. If you'd like to really help out, please share with friends, family members, faculty, alumni, grad students - any member of the Tufts community with a stake in our endowment being managed in a transparent, sustainable, responsible manner. If you click "bookmark" in the upper-right corner of the petition, you can easily share or post on Facebook, Myspace, and a number of other social networking sites.

One important thing to know is that the petition site does not sell or share the personal information that you will be asked to supply. Your email address will be used for one confirmation message; your physical address is requested to prevent fraud. But rest assured, they will not use this information. STIR has also been extensively petitioning in person and has actually gathered even more signatures offline than on the petition site - so if that number looks low to you, just remember to double or triple it in your head to get the real number of names that we have supporting us! We will be sending the petition, with all collected names, to campus media, local media, and the administration in the near future.

So go ahead - sign and show your support! And please spread the word, and help us by providing the critical mass necessary for the administration to take our demands seriously.

The Madoff mistake

Today in the Tufts Daily: the risks of focusing solely on the bottom line. Perhaps if the Advisory Committee on Shareholder Responsibility was given full advisory power and the ability to communicate with the administration and the community as promised, we could have avoided this fiasco.

“The thing about Madoff is that people couldn’t get to him directly,” Economics Lecturer Chris McHugh said. “He was playing hard to get.”

It was this phenomenon, it appears, that led Tufts to entrust $20 million to the Ascot Partners hedge fund and pay the fund yearly fees, all in order to gain access to Madoff’s consistent 10 to 17 percent returns.

And until the foundations of Madoff’s carefully constructed ruse came crashing down, the results appeared encouraging. According to Director of Public Relations Kim Thurler, Tufts administrators were under the impression that the investment had accumulated returns in the neighborhood of $5.6 million since it was originally made in 2005.

...

Laura Goldman, who runs the money management firm LSG Capital, called the university’s decision to invest through Ascot Partners and pay the associated fees irresponsible.

“They were fees way out of line for turning somebody over to somebody else,” she told the Daily. “[Tufts] should have said, ‘Listen, please introduce us to Madoff.’”

Dungan said that the university tried to skip the middleman, but like other potential investors, was turned away by Madoff.

“We … were told that Madoff was not taking any new separate accounts. Our only way to access this opportunity was through one of the various feeder funds,” she said in an e-mail.

But while the administration suggests that the front door was closed, Goldman said Tufts investors should have knocked harder. She argued that with a $20 million principal, the university could have found a way to avoid the middleman.

“Of course they could have called [Madoff],” she said. “When you’re the Tufts endowment, I think you can probably call Jesus Christ. That’s how the brokerage industry works.”

Goldman, a former Merrill Lynch employee who now operates out of Israel, met Madoff in the ’90s. She recently published an online account in which she describes the encounter, noting Madoff’s evasiveness and a plethora of red flags. After speaking with him, she recalls, she encouraged others to withdraw their investments from his accounts.

According to Goldman, Tufts too should have seen the warning signs. “Anyone who was at any time researching this knew something was wrong,” she said.

Maybe things didn't have to be this way. To invest in trustworthy, socially conscionable enterprises, and not get-rich-quick schemes, is the only way we can build a healthy and sustainable endowment worthy of our name.