The Middlebury Endowment: Where is our Money Going?
Ever wondered where our money is invested? Middlebury has an endowment of roughly $871 million dollars, composed of hundreds of gifts from donors. This money, invested in companies around the world, creates returns goes back to the college to support college spending.
Tuesday evening, in response to many student requests after the most recent Trustee’s meeting for more information on how our endowment is invested, Vice President and Treasurer of the college Patrick Norton hosted a meeting in Dana Auditorium that was attended by roughly 200 students. He was joined by Derek Hammel, who works as Director of Investments in the Treasurer’s Office, and Oliver Platts-Miller, an analyst at Investure LLC, the firm that works with the college to manage the endowment.
There’s a decent amount of literature available online about the college’s endowment through the Socially Responsible Investment Club (SRI) and the college’s website here and here . In short, the college has a yearly operating budget of $272 million dollars. $48 million (18% of total budget) of that comes from returns on our endowment. Norton emphasized, in a point he returned to many times throughout the meeting, that our endowment philosophy is to maintain budget stability and predictability. Norton also continually mentioned several points about Middlebury’s commitment to its students: Middlebury is committed to need blind admission and the promise to meet full need of each admitted student, small classes with a 9:1 professor to student ratio, and “A+” facilities. All of these things require a budget that is stable and predictable.
To give you a breakdown of how the money is invested, while the college investment committee decides what and where we invest our funds, they have hired Investure LLC, an investment firm to manage the funds for us. Investure, which also manages the assests for 5 other colleges and 6 foundations, then invests in a number of other managers who themselves invest in 15 to 30 companies. Complicated, I know.
Beyond that, we don’t actually know much about where our money goes. $4 million of the $871 is committed to a fund known as the “Sustainable Investments Initiative” which invests in socially responsible and sustainable companies. After the jump, the Q and A session…
Some key moments from the Q and A:
-Due to legal restrictions as well as the nature of the investment process, none of the speakers were able to specifically identify companies that we invest in.
-It is too early to tell how successful the Sustainable Investments Initiative has been, as it was designed for the long term.
-A report on the ACSRI returns will be available at some unspecified future date.
-Norton emphasized that they want to maximize return while minimizing risk.
-One student told Norton and others that as a soon to be alum she would love to donate to the college, but without knowing where the money is to be invested, she is unwilling to put that money blindly into the endowment, to which the majority of the students in the room agreed.
-Another high point of the meeting came near the end when a student requested one to three year trailing reports of the companies and mutual funds our endowment is invested in. Platt-Miller’s response: “I just don’t know what you would do with that list.” The student responded with “I’d love to look at that list, and I don’t think I’m the only one here who would.”
Check out SRI’s short video on the explanation of the endowment and how our money is invested:
Nathan Arnosti ’13, member of SRI responded to the meeting via email:
To their credit, the Investment Committee (including Patrick and Derek) has recognized the importance of long-term, non-speculative investments with capable money managers. But it was also clear that they were concerned only with steady financial returns. It was troubling to me that they saw no contradiction between funding Middlebury’s mission-statement-related environmental and community expenditures with an endowment that only looks at the financial bottom line.
What did you think? How would you like to see our endowment invested? With over 200 students in attendance, this is clearly an issue Middlebury students care about and would like to see addressed in the near future. We’d love to hear your opinions on the issue!
Trackbacks & Pingbacks
- Press release sent out to College claims Middlebury will divest from war | MiddBlog
- President Leibowitz Announces Endowment Statistics and Addresses Possibility of Divestment in All-School Email | MiddBlog
Comments are closed.
The seeming hostility to how the endowment is being managed is just bizarre. Left unsaid in the video and article is how expensive it would be to hire the staff required to mange the endowment to generate the kinds of returns necessary to maintain – most importantly – the need-blind financial aid provided by the college (in addition to the professor’s salaries, campus food and keeping the lights on). Investure is an extremely well regarded money manager with a great track record. It’s not clear that the OWS-posers who were agitating at this meeting understand that an 18% return after all fees and other expenses is wonderful accomplishment, one that will go a long way to shoring up the endowment to support the college’s operations. Investure also operates under contract with the college and that contract must be renewed every so often, so there is an opportunity to vet their performance on behalf of the institution with some frequency. If transparency is an issue, it should be raised with them – they certainly know what they’ve invested in on our behalf. It should be noted that failure to generate positive returns over the long-run would require the college to trim it’s operating budget including staff, and financial aid, while also dramatically increasing tuition and ability to accept students who require financial assistance. So while it’s wonderful to invest in “socially responsible investments” (by the way, do wind farms qualify, or not because they kill birds and bats?), none of that matters if those investment cannot generate strong, long term returns. Money, and the incredible college experience that is Middlebury, do not grow on trees, even sustainably harvested ones.