Move Your Money

Colleges and universities control millions (and even billions) of dollars of endowment funds. But do you know where your alma mater or local school puts all that money? Probably not. That’s a problem. Institutions of high education have the responsibility to make sure that the money they control goes back into their communities instead of shipping it off to Wall Street mega-banks and hedge fund managers. Steve Flynn, of the University of North Carolina Greensboro, thinks that his community is too charitable to not keep that money local. He explains:

I believe American Universities need a new paradigm as it relates to philanthropy and investment. We are expert at and resource significantly our planned giving enterprises on our campuses. Yet, our ‘expertise’ in terms of soliciting gifts goes only so far. In terms of actual investment decisions by investment managers, we typically outsource such expertise to ‘outsiders’ such as Cambridge and Associates (in the case of University of North Carolina-Greensboro I believe). The result? However good or bad our endowment returns each year (and its moral and sustainable impacts) how much of our endowment income and investments are actually directly benefiting our own community? I have no idea, since such information is not available in the opaque universe of endowment investing, but I would venture to say the answer might be none.



We are currently living in a world where assumed paradigmatic truths (which evolved over the last 30 or so years) about capitalism and high finance are now in question. Universities trained and staffed the whiz kids on Wall Street and London that got us into this mess. Having trained them, universities assumed these whiz kids would do right by university endowments. In the wreckage of 2008, where did that get us?



What do universities have to show for it? Far more importantly, what are our local communities gaining when we outsource our own investment management? I believe new thinking is the way of the world in the coming century and universities seeking relevance must change their approach.

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We agree that colleges and universities have a duty to invest responsibly. That’s why we support the Responsible Endowments Coalition in their fight to get schools to invest ethically.