Going one step further, UNC’s Schwab
says that, in many cases, transparency is an
impossibility. He says that many of UNC’s
investment agreements with managers and
private partnerships legally preclude the
University from releasing information. “It is
not within our control,” he said.
UNC did fare much better in other
aspects of The Sustainable Endowments
Institute report card, however. UNC
earned an “A,” for example, for its investment priorities, scoring points for putting
money into renewable energy and for
weighing sustainability issues when making
investment choices.
UNC took a stand of sorts against the
strife in the Sudan last year, deciding on a
policy against holding in its direct accounts
any entity identified as “highest offenders”
by the Sudanese Divestment task force.
This puts UNC ahead of the curve:
Ken Redd, director of research and policy
analysis with the NACUBO, says there has
been a general trend away from socially
responsible investing by endowments.
In responding to NACUBO’s most recent
survey, he said, some three-quarters of
endowment managers said they did not consider social responsibility when making
investment decisions. Why the drift away
from this criterion? Redd says that “socially
responsible” used to mean one big, clear-cut
and easily addressed issue: not investing in
companies that did business with or in
apartheid-era South Africa. But now the term
is at once more encompassing and diffuse.
“Nowadays it’s environment and sustainability and trying to avoid investments
in Darfur,” he says. “Those tend to be lesser
concerns.”
Where, when the money goes
The issue of endowment fund payouts —
which has received a great deal of national
attention in recent years — is another area in
which UNC seems to have steered clear of
controversy. University endowments —
though tax-exempt, as are Gates, Ford, Getty
and other big private foundations — do not
face the same legal requirement to pay out 5
percent of their assets each year. On average,
they pay out slightly less: about 4. 5 percent,
according to the NACUBO survey.
UNC’s distribution fluctuates around
the 5 percent mark. The fund has distributed $228 million to support UNC programs over the past three years.
As a result, some universities have been
accused of “hoarding” assets for the future,
instead of deploying them to keep college
costs down for the current generation of
students. Sen. Charles Grassley, a Republican from Iowa and ranking member of the
Senate Finance Committee, has been
among the loudest voices in pressing for a
5 percent minimum payout for universities.
But Richard Vedder, director of the Center for College Affordability and Productivity,
which studies rising college costs, says the
payout issue is far more pressing at private
schools, which often have gigantic endowments and comparatively few students. Harvard’s endowment, for example, is roughly 17
times larger than UNC’s but serves only
about one-third as many students. That works
out to about $2 million in endowment dollars per undergraduate student at Harvard,
which would generate more than enough
income to make each student’s yearly tuition
disappear. By way of comparison, UNC has
about $125,000 per undergraduate.
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