Panelists discuss endowment

by Charles Gardner | 10/26/01 5:00am

With an endowment of over $2.4 billion, Dartmouth has an obligation to incorporate social responsibility into its investment decisions, according to four panelists who spoke at yesterday's Collis Community Hour.

The discussion, which centered on the ethical and moral issues entwined in investment, featured former Surgeon General C. Everett Koop '37, KLD Research Analytics President Peter Kinder, Dartmouth's Associate Vice President for Investment Jonathon King and geography professor Roderick Francis.

Koop, who spoke first, began by heavily criticizing the tobacco industry, which he called "arrogantly dishonest," and "neither responsible, ethical or moral."

He emphasized tremendous costs imposed upon society by the smoking of cigarettes, including millions of lives lost to smoking-related disease as well as social and financial burdens, and held tobacco companies accountable.

Koop stressed that there are considerations "more important than the bottom line."

"Investment in tobacco has been a favorite of institutions with large portfolios," he said. "I'm opposed to the inclusion of tobacco stock in any college portfolio."

Kinder, whose firm provides research for institutional investors, dispelled myths surrounding socially responsible investing and talked of practical ways to structure a portfolio according to moral guidelines.

One common misconception, Kinder said, is that "one must accept a low financial return" in order to be socially conscious.

Kinder mentioned exclusionary screens, which involve making a set of companies to avoid in your portfolio, as one useful tool for the socially responsible investor.

King, who serves in the Dartmouth Investment Office, said that the College's endowment " roughly $2.4 billion " helps provide a quarter of the undergraduate budget, up from only 15 percent ten years ago.

Roughly 40 percent of the endowment is held in traditional equities, and the remaining breakdown is: 20 percent in bonds, 13 percent in private equities, 12 percent in hedge funds, seven percent in real estate, and five percent in other miscellaneous funds.

The endowment is divided between over 4,000 funds, and 70 percent of the holdings are restricted in their use. The endowment "is not just a bank account that can be spent in any way," he said.

King admitted that the goal of the College was "to maximize return" on its investments, and over 50 firms the College hires to manage its funds are not restricted in their choice of investments.

In past years, a committee of trustees, students, faculty and others -- the Council on Investor Responsibility existed to explore College investments from an ethical standpoint, though King said the committee "was always tied to the trustees and never got the appropriate time or attention."

The College is looking into creating a new committee "that will hold discussions and forums to deal with some of these issues," King said.

Francis placed the issue of responsible investment in a larger context of the country and the global economy.

"From the early 1970s, the ability of governments to regulate investments has faded," Francis said. "We [can't] rely on a regulatory framework to make sure investments are carried out morally."

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