Huff Post coverage for C-SocPhil endowments report
In the Huffington Post, Bob Samuels reviews the Center for Social Philanthropy at Tellus Institute’s recent report on “Educational Endowments and the Financial Crisis,” principally authored by Joshua Humphreys, senior associate and the Center’s director.
An excerpt from Samuels:
Not only are large endowments and pension funds plagued by conflicts of interests, but as the Tellus Institute report explains, these huge pots of money contributed to the global financial meltdown: “By engaging in speculative trading tactics, using exotic derivatives, deploying leverage, and investing in opaque, illiquid, over-crowded asset classes such as commodities, hedge funds and private equity, endowments played a role in magnifying certain systemic risks in the capital markets. Illiquidity in particular forced endowments to sell what few liquid holdings they had into tumbling markets, magnifying volatile price declines even further. The widespread use of borrowed money amplified endowment losses just as it had magnified gains in the past.” One reason why these wealthy universities have taken on so much debt is that as they started to lose at the global speculative casino, they decided to double down on their highly leveraged investments.
