Colorado College’s endowment is like the sun.
Everything that happens on campus eventually rotates around the $532.53 million that is invested in a diverse mix of asset allocations spread out between over two dozen independent managers.
The millions of dollars raised and invested among the many entities fund financial aid, professorships, department funding, and even library books.
“We’re madly spending it, we’re trying to raise it and we are trying to make money off it,” said Robert Moore, Vice President for Finance and Administration/Treasurer.
The endowment has come under intense scrutiny from the CC community because of investments that some call “socially irresponsible,” including companies that have track records of environmental abuses and corporate irresponsibility including Haliburton, Monsanto and Exxon Mobile.
Students in years past appeared to be under the impression that the endowment investments made by CC were being kept secret in order to withhold that knowledge from the community.
“That is never really the intent from our space, at all,” said Stacy Lutz Davidson, Assistant Treasurer and Director of Investments.
HOW IT WORKS
The endowment is the fiduciary responsibility of the Investment Committee of the Board of Trustees. The Board consults with Monticello and Associates, a firm from Denver, which presents market research and recommends which managers the college should invest in.
“When students say the endowment is our money, that’s not really true because there isn’t any tuition money in the endowment,” said Nathan Lee, Colorado College Student Government President. “That’s kind of a big thing people get up in arms about but it’s really the college’s. It’s our money but it’s also all the alumni’s [etc.].”
CC invests in many different managers, some of whom run a large percentage of the college’s money, and others that only hold a small portion.
JW Bristol Holdings manages 29 percent of CC’s total endowment, the largest portion managed by a single firm. CC provided The Catalyst with the entire breakdown of the Bristol investments, showing where all the assets are held. The student government and finance office are currently working on a way to make the information public to the community.
With companies other than Bristol, the information is not as readily available.
Managers with only a small portion of the endowment often do not report to the college where the investments are made, and, when they do, it is only the top five to ten investments, according to Moore.
“The whole way they make money is they do they do the analysis and decide where to invest,” said Moore. “If you share that with the competition you are destroying the entire way they do business. They are trying to work just for the people who bring money to them.”
In many cases, CC isn’t actually aware where investments are being made.
“[Bristol] is the manager we have been working with since 1972, so this is a very important relationship with the college,” said Lutz Davidson. “…They are buying securities in Colorado College’s or [other institutions’] names.”
Bristol only serves higher education clients, and selects a few managers to buy and sell positions. Bristol reports quarterly on the investments and is more transparent than others in the industry, said Moore. With the rest of the managers, CC does not own the underlying security, which means they cannot participate in the proxy voting on the investments.
Proxy voting is a list of company questions that come up at annual stock holder meetings where share holders have the right to send questions regarding environmental issues, CEO pay, and political points among others.
CC receives information on the proxies throughout the year, and in prior years interested students of the Sustainability Council voted for companies that were sustainably responsible and green.
Two years ago, two students took particular interest in the council. They presented to the Board of Trustees and attempted to create a policy to formalize the voting, said Lutz Davidson. Last year, there were also students who were involved but did not vote.
“We believe in all of you [students] coming to us, and doing research, and grabbing the information as opposed to us just pushing it out,” said Lutz Davidson. “…The best example is the proxy. A few years ago I was spending hours doing research on proxies and I was spending the tuition dollars that the college is paying me to do student work.
Despite all of her time gathering information and trying to put together a program to get students engaged, nothing happened, Lutz Davidson said. Two years ago, it bubbled up again with students who were more engaged, and they presented their work to the trustees.
After those students, the wheels stopped moving. Administrators said they believe there is a normal ebb and flow regarding what students are interested in.
This year there has been no student involvement.
“The way [the students] approached it was they looked at issues that they thought were important to the community and made [proxy] decisions based on that,” Moore said. “That is the group that has been most interested.”
In the past, however, discussing the endowment hasn’t always been two-sided.
“Our Board, so far, has decided that this is the way they want to handle this responsibility,” said Moore. “They understand that there are other issues, there have been presentations, and there have not always been conversations. I think that this Board is open to a conversation as opposed to people telling them what they need to do.”
The Board would love to have students come and present on other similar peer institutions who have sustainable, successful investments, according to Student Trustee Samantha Barlow.
It raises the question, however: on what level does that the responsibility fall on the Board rather than the students?
“I think asking a manager to do that work is probably not unrealistic because we are asking them to invest the money,” Lutz Davidson said. “…Monticello is a consultant and they give us comparative data to other institutions that they work for. I don’t know if they have a stance when it comes to socially responsible or green investments. It has been a regular conversation between us.”
Monticello has been unable to find a top ten percent management company that fits within those sustainable guidelines, said Lutz Davidson.
“[Students] and I also had a lot of conversations about activism versus withdrawal,” she said. “If you withdraw, you don’t have that voice as a proxy, and you no longer have a chance for your voice to be heard.”
Though it might seem like those proxy votes are meaningless to a large corporation with endless shares and stockholders, historically shareholder meetings have shown that they can make a difference, according to Larry Stimpert, Professor of Economics and Business.
“There is a point where you can reach a critical mass,” Stimpert said. “It requires a lot of work, but it can make an impact.”
WHAT’S RESPONSIBLE AND WHAT’S NOT?
Thought it might seem simple to invest in socially responsible companies that match the core values of the college, according Lutz-Davidson and Moore, it is much more complicated.
“It’s really hard to figure out what that core value is,” said Moore. “…The Board feels like it is too difficult for them to figure out who is ‘good’ and ‘bad.’”
Judging a company as socially responsible isn’t always clear-cut. “For every bad thing there are probably three or four good things,” Professor Stimpert said. “It’s hard to paint it with a brush. It is very complicated.”
Money has to be earned to keep up value from the previous year, and then inflation comes into play as a factor, which means the college has to earn about eight percent in returns in order to maintain the endowment.
“I think it’s clear the investment committee, the members, are very clear in their minds that we have to do the best we can [to maintain the gift and be able to pay it out],” said Moore, “and if we begin to pick and choose based on what [the students] think, the problem is you’ll never agree and then we have a long list of what we won’t invest in and we will have lost an opportunity to maximize the profits.”
The board feels its fiduciary responsibility needs to be able to make the payout and also maintain gifts for years into the future, according to Moore.
CC has looked into the concept of investing in sustainably responsible companies and found the outlook poor, said administrative officials.
“Bristol told us that they had a client who tried to do that, and in two years their model collapsed, and they had to back out of it,” Moore said. “Bristol was willing to say to somebody, ‘You don’t want this one; we will stay out of it.’ But pretty soon they came back and said we can’t do that and had to drop everyone.” While he isn’t saying that same scenario could play out at CC, Moore says it is still difficult to say what is bad and what is not.
Officials say they are working on making information about the endowment more readily available to students through an updated website and potential brochure. If the campus wants to get involved, Lutz Davidson encourages people to write letters, prepare presentations, and speak with her regarding what they can do to get involved.