Dear Commons Community,
The Daily Finance has an article on the investments of college/university endowments claiming that losses incurred in part might be attributed to steering funds to properties managed or owned by their trustees. Reuters reports that colleges and universities including Dartmouth, Brown, Northwestern, and Stanford, just to name a few, have disclosed investments in funds linked to their trustees. And in a 2010 survey of tax returns filed by 618 private colleges, The Chronicle of Higher Education found that about 25% of the schools examined disclosed financial connections to real estate businesses, construction companies, and other service providers associated with their trustees. On average, college endowment higher than $1 billion averaged one-year losses totaling 20.5% since 2008.
The article refers specifically to data on Dartmouth College investments of almost $80 million to properties connected to their trustees. Inside Higher Ed notes that while Dartmouth is open about its investments in these firms, stakeholders are complaining that the board has stonewalled them in the face of questions about the fees associated with its investments. In addition, stakeholders say that the school fails to offer online archives of investment notices, and so it is difficult to get a full and accurate picture of the amounts invested in trustees’ firms or of how well these investments have performed.
We don’t know how extensive this problem is but one thing is sure: When trustees make irresponsible investments, students and their families will have to pay more for their college education.