To the Trustees of Wesleyan University

by Joshua Krugman, Paul Blasenheim and Eliana Theodorou

To the Trustees of Wesleyan University,

cc:
Michael Roth, President
Anne Martin, CIO

Wesleyan University finds itself today at a major crossroads in financial strategy. The continuing aftereffects of the first devastating economic crisis of the twenty-first century, and the relatively small size of our endowment that has resulted partially from it, convene to place the University in an ideal position to reevaluate how it goes about investing the money it receives from its alumni and friends.

In this letter, in addition to calling for the initiation of just such an appraisal by the Trustees of the University, and in addition to offering to the Trustees a few examples of prudent and ethical tactics for future endowment development, the Wesleyan Socially Responsible Investment Coalition also brings before the Trustees a few basic demands for investment transparency that will serve as a starting place for this process. These suggestions and demands are motivated by a love of Wesleyan and what it represents, a gratitude for all the opportunities it has afforded us, and a commitment to ensuring that it remains such an excellent institution for a long time to come.

In recent months there has been growing concern among Wesleyan students and alumni about some of the corporations in which Wesleyan invests. This concern is based in part upon a document generated by one the University’s fund managers and made available to the community by the investment office last winter, which contained the names of some of the businesses in which Wesleyan was directly invested. The list included such notorious names as Sara Lee Corporation, Raytheon, and Arch Coal, among others, and thus prompted many to worried speculation about how Wesleyan invests the rest of its endowment.

At the same time, there is and has been among students a great sense of optimism about the responsible and profitable possibilities for endowment development that Wesleyan could engage as it reassesses its investment strategies in the coming months and years.

While it is often assumed that so-called socially responsible businesses and mutual funds cannot offer returns great enough to entice the large institutional investor, in fact there is an increasing number of  “socially responsible” mutual funds that do quite well (for example: “Legg Mason Social Awareness Mutual Fund” – 14.67% returns in fy 2010; “Total Return Utilities Fund” – 14.1% in fy 2010; and “Walden Small Cap Innovations Fund” - 25.7% in fy 2010). In addition, the green technologies industry is booming, providing excellent returns to investors.

Another option is to entrust the portion of the endowment that is held in cash to a local bank or banks. Local banks offer the same interest rates as larger, distant banks, and are also FDIC-insured so there is no less security. By placing its cash in a local bank the University would support the community of which it is a part by contributing to the vitality of local entrepreneurship.

To reiterate: it is possible for Wesleyan to remain true to its core commitments to social and ecological accountability while investing profitably and thereby guaranteeing its excellence far into the future. Moreover, the conscionable investment of Wesleyan’s assets could be a significant potential source of prestige for the University as it vies with peer schools for “green” and “progressive” credentials: sustainable investment represents a major opportunity for Wesleyan to lead the pack.

Michael Roth, President of Wesleyan, has posited publicly that one of the chief reasons why Wesleyan has lower annual giving and a more modest endowment than other schools of its caliber is that its alumni choose to donate to a range of world-bettering non-profits instead of to its capital campaigns. Who says Wesleyan can’t be a world-bettering non-profit? Certainly educating its students at the level that it does and fostering in them a creative, skillful, and critical dedication as scholars and citizens is world-bettering in and of itself. But we would like the Trustees of the University to appreciate that investing the money they receive from alumni and friends in sustainable and socially responsible firms is another vital piece of the puzzle, and one that, if touted, might well increase annual giving from progressive-minded alumni.

All this being said, the current state of affairs, in which the students, alumni, faculty, and staff of the University do not have access to information about the placement of its assets*, is untenable and unacceptable. The Wesleyan SRIC puts before you at present four basic demands for investment transparency, in the hopes that such steps, as described below, will begin a process that will benefit not only Wesleyan’s financial future and its reputation among its peers, but also the surrounding community and the world at large. Even these first steps to increase transparency will put us ahead of the other elite colleges with whom we compete, and will help to foster meaningful and constructive dialogue between trustees, administrators, students, alumni, faculty and staff about Wesleyan’s fiscal course in the years ahead.

1) It has come to students’ attention that one or more of Wesleyan’s fund managers refuse(s), on contractual grounds, to make available to the campus community, through the Investment Office, a list of the companies in which they have invested the University’s money. Any such contracts must be renegotiated such that they require managers to divulge (to the investment office, for transmission to the University community) the names of the companies in which they are investing the University’s money. If they will not submit to these terms, other fund managers must be found.

2) It must become permanent policy of the Wesleyan University Investment Office that its contracts with the fund managers who invest the University’s direct holdings require them to create and release (to the investment office, for transmission to the University community) a report that includes details of what they are doing with the University’s money.

3) This report must include the name of each fund manager and the firm with which s/he is associated, as well as the names of the companies in which the fund manager has invested, ranked in descending order of amount invested in each at the time of the issue of the report. In addition, the report must state the total amount, in dollars, that all of Wesleyan’s holdings with that fund manager comprise at the time of the issue of the report. Such a report must be generated quarterly by the fund managers and made available online to all Wesleyan students, faculty, and staff, and alumni by the investment office.

4) The Wesleyan CIO must, on the same quarterly basis, make available to the University community a basic scheme of the distribution of Wesleyan’s other assets. This scheme ought to include the total amount in dollars these assets comprise at the time of the issue of the report, and the percentage of this total amount devoted to each class of investment at that time.

5) The Trustees of the University must begin a dialogue with the CIR (Committee for Investor Responsibility) with the end of broadening the powers of that body to co-construct University investment policy. The CIR must immediately be granted all the information necessary to exercise the most basic responsibilities it is chartered to complete, namely, the power to submit, on behalf of the University, proxy votes and proxy resolutions to all of the firms in which Wesleyan directly invests.

Signed,

Members of the Socially Responsible Investment Coalition and members of the Wesleyan Student Body

-As of time of print, 84 students have signed a petition that is still being circulated in support of this letter.

This coming Sunday the Wesleyan Student Assembly will vote on a resolution in support of the demands made in the above letter. Please urge your WSA representative to support the resolution. We encourage members of the student body to come to next week’s WSA meeting to show their support for the resolution. You can add your name to a petition in support of the letter and the WSA resolution by finding the link on the Socially Responsible Investment Coalition’s Facebook page: http://www.facebook.com/pages/Wesleyan-Socially-Responsible-Investment-Coalition/


  • alum '10

    I hope the resolution doesn't pass. You obviously don't know the world of million dollar investments. If other schools learn the makeup of Wesleyan's endowment, they can use that info for financial gain, which won't help us (and will make us poorer by comparison). It only works if everyone becomes transparent, and that's not going to happen. Please don't make our endowment even crappier! It's one thing to be idealistic, and it's another entirely to be pragmatic.

  • http://www.facebook.com/people/Ron-Robins/650682205 Ron Robins

    Good luck with your campaign!

    A few points. Just like 'conventional' investing, socially investing provides returns all-over the map. However, serious, unbiased studies do show that in general, long-term returns on socially responsible investment portfolios are as good, and sometimes better, than with most regular portfolios.

    See http://investingforthesoul.com/Main%20Pages/ethical-investing-CSR-research-studies.htm

    Furthermore,surveys all-over-the-world show that most investors want to invest in ethical companies and don't want their investments being the cause of grief to others. Then since so many of our core values are alike — and are supportive of higher ideals -- that in the long run, only companies employing these higher values will likely prosper.

    I've been following socially responsible ethical investing for some forty years.

    Best wishes, Ron Robins

  • Sorry

    "You obviously don't know the world of million dollar investments. If other schools learn the makeup of Wesleyan's endowment, they can use that info for financial gain, which won't help us (and will make us poorer by comparison)."

    Hi. I know the "world of million dollar investments," and this argument has little substance behind it. Columbia University releases its direct holdings to anyone who asks. The University of Texas publishes a list of its money managers on its website. These schools are doing MUCH better than Wesleyan and they have much more in the way of transparency (and in Columbia's case, a responsible investment infrastructure.)

    If you're worried about folks finding out the "makeup of Wesleyan's endowment," whatever that means, you should watch out - it's pretty easy to find most schools' asset allocations with a bit of research. And, unsurprisingly, the vast majority are invested in pretty much the same stuff.

  • http://recnew.dreamhosters.com/students-at-wesleyan-demand-changes/ Students At Wesleyan Demand Changes | Responsible Endowments Coalition

    [...] Click here to read the rest of the letter. This entry was posted in Uncategorized and tagged community investment, local banks, move your money, tufts university by Dan Apfel Executive Director. Bookmark the permalink. [...]

  • http://recnew.dreamhosters.com/campus-updates-october-2011-recs-national-conference-college-bank-transfer-day-and-more/ Campus Updates, October 2011: REC's National Conference, College Bank Transfer Day, and more! | Responsible Endowments Coalition

    [...] at Wesleyan University are taking on their university’s investment and banking policies. Check out this open letter they wrote to their Board of Trustees. We look forward to hearing more from them in the coming months as they demand their voices be heard [...]

Media