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Endowment battle brews at BC
Students fight for disclosure of school's investments

By G. Jeffrey MacDonald, Globe Correspondent April 3, 2005

On the heels of another banner year for Boston College's investment team, not everyone on campus is jubilant that the school has earned $380 million since 2003. Students concerned with nondiscrimination policies, the environment, and other issues are pushing to know whether the $1.35 billion endowment is invested in keeping with the school's values and Jesuit mission. But to date, the administration has offered them no satisfaction.

In a posture that sets Boston College apart from many of its peer institutions, the administration has been consistently cold to a series of student initiatives for ethical investing. Requests to see the investment portfolio have met the same response as a 2004 proposal to establish an advisory committee on responsible investing: a firm 'no.'

Student activists are planning this spring to hold teach-ins, launch a letter writing campaign, and create satirical works of public art, all aimed at getting finance officers to share their list of companies with the college community. Until that happens, student activists say, parties with a stake in the institution will wonder what there is to hide.

''The longer that I don't get a response from the administration, the more my interest is piqued," said sophomore Evan Hendrich. ''I think there is something going on that they don't want people to know about."

With at least $276 billion tucked away in endowments, college investing nationwide has become big business, and students increasingly want evidence that it's being done with a social conscience. More than 20 colleges have disclosed their holdings since 1999, generally in response to student initiatives, according to Mark Orlowski, cofounder of the Responsible Endowments Coalition. About 25 schools have either introduced or expanded advisory committees to involve student input in ethical investing decisions. For any institution to deny student requests for disclosure, Orlowski said, ''is rare."

School communities wishing to wield influence beyond the ivory tower of academe have found that having hundreds of millions to invest gets the attention of corporate America. And when students pay tens of thousands per year to an institution that will forever court them for donations after graduation, Orlowski said, they need to know how its investments are actually reflecting the community's values.

''Millions and millions of dollars are coming into Boston College, and students have no idea where that money is coming from," he said. ''Wouldn't you be a little bit concerned if your institution was receiving millions of dollars and yet you didn't understand or know where that money was coming from? . . . The lack of disclosure brings up important questions about the way a school's endowment is being run."

Not so, say officials at Boston College. Spokesman Jack Dunn said the school steers clear of investments that would be inconsistent with the principles that guide the Jesuit university, although he declined to specify how money managers are instructed to interpret those principles. Investment decisions, he said, are trusted to an eight-member committee, seven of whom have studied at Jesuit institutions, including celebrity investor and Boston College alumnus Peter Lynch.

''Given the composition of the investment committee, we feel confident that the University's religious and social justice concerns are properly addressed," Dunn said. What's more, disclosing the portfolio is not an option.

''They've never disclosed that because to disclose it would put us at a competitive disadvantage," Dunn said. ''It would be a blueprint for other institutions to follow."

Boston College's investments have been red hot. The school's 18.8 percent return for 2004 outpaced even those from the venerable $22.1 billion endowment at Harvard University. Just 35 years ago, Boston College's endowment stood at a mere $5 million, but ambition looms large here. Since 1999, the school has been at work to create 100 new endowed chairs, expand research and add buildings. In April 2004, the school agreed to buy 43 acres for $99.4 million. All along, investing has enhanced BC's stature. Of the nation's 220 Catholic colleges and universities, only Notre Dame has a larger endowment.

In investing, however, profit is just one consideration for most Catholic organizations. The 1,100 Catholic institutions that invest through Christian Brothers Investment Services, for instance, have joined the US Conference of Catholic Bishops in refusing to provide capital for major defense contractors and manufacturers of birth control products, among others industries. By contrast, Boston College has not publicly ruled out any particular sector or type of company for investment. It also defers to money managers to use their own discretion, informed only by general principles adopted in 1990, when voting on behalf of the institution at shareholder meetings.

Many Catholic colleges do not disclose their investments, but most have amended that policy when groups of students, faculty, or alumni have asked to know, according to Michael James, vice president of the Association of Catholic Colleges and Universities.

Before pressing for a particular agenda, student activists are focusing on disclosure as a first step. In James's view, BC is ''probably more concerned about strategy" than possible fallout from announcing that it owns a particular company's stock. But some in the investing world question how a disclosed portfolio would become a liability to strategy or performance.
''I don't understand that," said John Wilson, director of Socially Responsible Investing at Christian Brothers Investment Services. ''I don't see how it would affect the growth of their endowment [at Boston College] if someone else were to copy what they're doing."

Meanwhile, patience is wearing thin in some corners of the Chestnut Hill campus. Nick Fuller-Googins has advocated for ethical investing at Boston College since his freshman year. Now a junior, Fuller-Googins fears administrators are trying to say, '' 'We need more information, we need another meeting,' until we graduate."

According to Dunn, members of the administration met with students from the Global Justice Project last year and explained that ''what they want us to do, we're already doing." For instance, financial officers already commission social research from the Investor Responsibility Research Center and meet regularly with the endowment's money managers ''to monitor compliance with our investment policies and procedures."

''We then offered the students an opportunity to review a particular social issue as a scholarly exercise," Dunn said. ''They have thus far declined to accept our offer, but the offer still stands."