C-SocPhil director speaks at Tufts on endowment issues
Joshua Humphreys addressed students at Tufts University on responsible investing by college endowments.
BOSTON — The Center for Social Philanthropy’s director Joshua Humphreys, a lecturer at Harvard University and Senior Associate at Tellus Institute, addressed a crowd of students Monday evening at Tufts University about responsible investing by foundation and university endowments. The panel discussion, organized by Students at Tufts for Investment Responsibility (STIR) and the Jumbo Janitor Alliance, included venture capitalist Dana Callow, a Tufts alumnus, trustee and chair of the university’s investment committee, and economist Neva Goodwin, co-director of the Global Development and Environment Institute at Tufts.
Dr. Humphreys kicked off the discussion by describing the Center’s work on mission investing and active ownership with foundations. He highlighted the growing interest in social and environmental investing by foundations, especially in the wake of the bad press the Bill and Melinda Gates Foundation received for investments it had made in companies that undermine its public-health work in places like the Niger delta and South Africa.
Tufts has also felt the sting of exposure for its investments. It was among the universities and foundations to suffer from the Madoff meltdown, as a result of its $20 million investment with J. Ezra Merkin’s hedge fund Ascot Partners, L.P., which had invested substantially all of its assets with Bernard L. Madoff Investment Securities, allegedly the largest Ponzi scheme in history. Dr. Humphreys suggested that despite the fraud and deception involved, the use of responsible investing strategies could easily have raised red flags about the trading strategies advertised by both Merkin and Madoff, which he argued were inappropriate for institutional investors such as endowments with long-term investing horizons.
By asking harder questions about how their managers were voting the shares under their control, for example, as mutual funds are now required to disclose, investors could have anticipated that something was awry in hedge funds such as Merkin’s. More broadly, Dr. Humphreys called for an abandonment of short-term trading mentalities in order to return to a more fundamental approach to endowment management that seeks to direct capital into companies that are making positive contributions to the economy, the environment and the communities in which they operate.
Tufts is currently exploring the possibility of greater student involvement in proxy voting, and Dr. Humphreys stressed that at Harvard University, where he lectures, students have institutionally provided proxy-voting recommendations through an Advisory Committee on Shareholder Responsibility since the 1970s.
However, most of Tufts’s endowment investments are through managers and commingled investment vehicles, which vote shares on the university’s behalf. Dr. Goodwin spoke directly to the problem of commingled funds, and described her current efforts, using research and data gathered by the Center for Social Philanthropy, the Sustainable Endowments Institute and ProxyDemocracy, to bring together foundations and endowments to raise collective concerns about passive proxy voting by the leading managers of foundation and endowment capital.
The event was covered by The Tufts Daily.
The Center for Social Philanthropy regularly advises and collaborates with numerous groups on responsible endowment management issues at both foundations and colleges. It has collaborated with Responsible Endowments Coalition, Sustainable Endowments Institute, and other nonprofit and labor groups. The Center’s director Joshua Humphreys also serves on the Advisory Board of the Dwight Hall SRI Fund at Yale University. For more information on our work on endowments, call the Center at (617) 710-2853 or email us at info@socialphilanthropy.org
