SRI Committee seeks support for proposal

Trustees to revisit socially responsible investing options

By: Marianna Nash

Posted: 12/3/09

As the administration continues to work on strategies for spending the College’s endowment, one student group is thinking about ways to invest it.

The Socially Responsible Investment Student Committee, which formed in 2005 out of a Student Coalition for Action (SCA) campaign, recently drafted a proposal to invest small portions of the endowment in socially responsible ways.

One of the proposed methods of Socially Responsible Investment (SRI) is Community Investment (CI), which benefits local economic growth. Other types of SRI include mutual funds that screen out companies judged to be environmentally or socially harmful.

“We think both investments are in line with the ideals that the College promotes,” said Elizabeth Cooper ’10, a member of the SRI Committee.

“Mount Holyoke [states that] its mission is to foster ‘purposeful engagement with the world.’ I think that ‘purposeful engagement’ should happen on a broad scale, but it should also happen specifically between us and our neighboring communities.”

The proposal’s three main objectives are to invest one fifth of a percent of the endowment, roughly $1 million, in community development; to designate a Social Choice Fund for donations to the College that would be invested in socially responsible ways; and to become an officially recognized Student Government Association (SGA) committee.

On Tuesday, Nov. 17, the SRI Committee presented its proposal to SGA. According to SRI Committee member Elena Cohen ’10, several of the Committee members will meet with the Chair of Committees this Friday to discuss their bid for official advisory committee status.

“It’s really to try to institutionalize Socially Responsible Investment and have it come out of not SCA, but SGA,” said Cohen. “We hope that the committee will have the power to oversee, or at least make recommendations, for the Social Choice Fund.”

According to Cooper, the Social Choice Fund would give young alumnae a greater incentive to donate. “If they are concerned about issues of social responsibility, they can donate to their alma mater knowing the money won’t be doing any harm, and might even be doing some good,” she said.

On Nov. 18, the SRI Committee delivered its proposal to the College’s Investment Committee, a subcomittee of the Board of Trustees’ Finance Committee with both Trustee and non-Trustee members, via videoconference. It was not the first time SRI advocates had appealed to the Trustees for support.

In Feb. 2003, members of SCA met with the Investment Committee to propose investing one percent of the endowment in socially responsible funds.

The Investment Committee declined that proposal, instead opting to grant the students a pilot fund for soliciting donations.

“We were impressed with the presentation the students gave,” said Audrey McNiff ’80, chair of the Investment Committee. “We also thought it would be very good for students to understand investing, and constructive for students and alums to understand the concept of giving back.”

Two years later, the SRI Committee made its first and largest investment of $10,000 in the Cooperative Fund for New England (CFNE), which invests in economic development. That investment has performed most successfully out of their four investments, which include mutual funds supporting alternative energy practices and global human rights.

To support their newest proposal, SRI Committee members pointed to the pilot fund, which has raised over $25,000 since 2005, and will be added to the endowment either as part of the proposal or as a fund after reaching a goal of $60,000.

In the past two years, both the College’s endowment and the SRI Fund took a plunge. According to data from investment management firm Cambridge Associates LLC., the College’s portfolio usually lies in the fifth percentile of similarly sized portfolios handled by the firm. It plummeted from to the 75th percentile during Fiscal Year 2009. Two of the SRI investments have market values below zero.

“I think that the performance has been fair,” Associate Treasurer Jan M. Albano said of the SRI Fund. “The difficulty is that, with these last two investments, they entered the market at a difficult time, so right now the performance is looking pretty dismal.”

However, Cooper proposed that the Social Choice Fund would attract more donors and said that the funds were too small to exacerbate the situation, which has been improving along with the economy as a whole.
“The amount that is being discussed at this moment to invest in a socially responsible manner is very small,” Cooper wrote in an e-mail on Sunday. “Changing to community investment should not have an adverse effect on the College’s investments in general, because it would be meant to substitute for other similarly performing investments that are also low risk, lower return [and] long-term, such as government bonds.”

Albano said that while the funds are similar in size, they are not comparable. The New Alternatives Fund, a mutual fund supporting alternative energy and the environment, was an example of one such challenge.
“Its returns can vary wildly from year to year. You’re investing in a small sector—energy—within an even smaller sector, alternative energy.”

Albano and McNiff both said the Investment Committee needs more information before it can deliberate on the proposal.

“It would have to make sense in terms of our fiduciary responsibilities, maximizing the performance of the portfolio and making sure we’re not taking any undue risks,” said McNiff. “We have been very thoughtful about the way we have structured the portfolio to maintain the integrity of the Mount Holyoke endowment, so we don’t make any move lightly. Before we would even think about making a decision, we would need a lot more information. So far, we have only seen their performance in a vacuum, and we need to know what their peers are doing.”

According to Cheyenna Weber, organizing director for the Responsible Endowments Coalition (REC), 37 U.S. colleges and universities are officially engaged in socially responsible investment initiatives.
“If people have money and they’re spending it locally, then that money is going to stay in the community, instead of going into corporate franchises,” said Weber. “This will grow the small businesses and the local businesses that aren’t necessarily private corporations, because the money actually builds wealth in the community.”

Members of the SRI Committee have attended REC conferences over the years in Philadelphia and New York City, and maintain relationships with similar student organizations.

“I really believe that if you want to work for social justice, you have to start with your home community, and that’s exactly what community investment and socially responsible investment are,” said Cohen, who was introduced to the SRI campaign through friends in SCA. “As a college, we have these responsibilities, and it’s true that one individual college doesn’t leverage that much power with its endowment—but when you think about all the colleges and universities in the United States, that’s a lot of money. And I think that’s really what this movement is about.”