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A Massive Positive Impact Potential: 5 Reasons Colleges and Universities Should Move Their Money

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1. "With great power comes great responsibility," especially in a crisis.

According to the Bureau of Labor Statistics, 13.9 million people are currently unemployed. That's larger than the population of New York City. The unemployment rate of 9 percent -- close to the highest since the great depression -- has been listlessly meandering within a range of .2 percent since April. The new census data reveals that 49.1 million Americans currently live in poverty. We have a wealth distribution comparable to those of India and Nigeria with 1% of the population rolling around in 34.5% of the nation's wealth. And the other 99%? They are getting arrested in your local public space furiously protesting all-of-the-above.

Colleges and universities cannot continue to passively watch this crisis unfold. They may study and discuss the situation, but they must also recognize their own integral role in it and respond accordingly in action. What is integral? How about their collective $350 billion in endowments and almost $100 billion annual spending? Combined, that's more than half the amount of Obama's stimulus package. In light of the righteous values they espouse in their mission statements, the time has come that they put their money where their glossy brochures are. They must step up and not only act as institutions that generate knowledge and leaders but as institutions that facilitate the use of that knowledge by those leaders to innovate and improve. Not to mention, colleges and universities enjoy non-profit status; they do not pay any taxes. As publicly subsidized institutions, they must be accountable to the suffering American public by moving their money out of big banks.

2. Big banks cause our major problems.

By keeping their massive endowments in big banks, colleges inherently support the behaviors of those banks and everything those banks invest in. And those things happen to constitute the seeds sowed from which we now reap this crisis. Big banks caused our economic collapse and would have caused their own demise if we, the 99%, had not bailed them out to the tune of $700 billion. Then, they turned around and used it to lobby Congress to gut regulations that would protect the public from the banks' practices that caused the collapse in the first place. They weasel out of paying virtually any of taxes that would support the desperately needy Americans that bailed them out. This behavior sends one clear message: to hell with the American public.

Big banks enforce the poverty cycle by refusing service to our most under-served populations except in the form of predatory loans that only ever financially debilitate. This is the force that pries the wealth gap ever wider. These big banks also invest in merciless environmental destruction in areas from agribusiness to mountain top coal removal to the Keystone XL pipeline. They invest in the weapons industry and in wars and in private prisons, always in search of the highest profits. And here lies the basis of our problem: blindly profit-driven practices end poorly. Look around.

3. Credit unions and community development financial institutions provide solutions.

Unlike big banks, credit unions and community development financial institutions (CDFIs) function not-for-profit. Also unlike big banks, credit unions and CDFIs provide low interest loans, mortgages, support to small businesses, and other financial services that support under-served people. And "underserved" with the current wealth gap, a solid 90% among which a mere 26% of the nation's wealth is spread thinly. Credit unions and CDFIs operate to serve their own geographic areas and spur the growth of sustainable local economies. Rather than causing problems, they funnel money towards solutions such as affordable housing, inner-city food security, and energy-efficiency retrofits.

College and university partnerships with credit unions and community development financial institutions have potential to massively boost sustainable local economies and reverse the negative trends that big banks perpetuate. $450 billion in the hands of responsible lenders aimed at the huge majority represents enormous possibility to improve the lives of average Americans whose household salary is probably around $49,445 a year. And small businesses, who need capital to grow and create jobs can use loans even in sizes less than $100,000. That means millions of loans. Talk about a stimulus.

4. For Example

Let's think about this concretely. Picture the campuses of Columbia, University of Chicago, Yale, or Johns Hopkins. Now picture Harlem, New Haven, the south side of Chicago, or Baltimore. These campuses in the context of their communities and many more like them demonstrate visually our severe inequality. While cities frantically sell off their assets and close libraries struggling to scrape together budgets that allow even minimum infrastructure upkeep and safety nets to the poor, universities pay zero property taxes. Moving their money into credit unions and community development financial institutions would provide colleges and universities with a smart and sustainable means to directly inject capital into communities that desperately need it.

Not only do these communities desperately need this capital, but they also have great potential to prosper. With such proximity to hoards of cash-flush students and administrators, it would only take a small amount to jump start local businesses and breath life into poor neighborhoods, by bringing jobs to residents, thus benefitting schools that could then boast a more desirable location.

5. It's a win-win.

As previously stated, colleges use the big banks for their financial transactions. But, financially stable and federally insured community banks, community development financial institutions, and credit unions could provide for many if not all of the financial needs of colleges and universities. These investments pay competitive rates of returns to comparable assets and present equivalent risks. Considering the potential benefits of community development, there is no financial reason for institutions of higher education not to invest this way.

Howard Zinn said, "You can't be neutral on a moving train," and our nation's crisis is certainly a moving train headed in the wrong direction. In this crucial moment, inaction on the part of colleges and universities actually constitutes a hugely detrimental action while $450 billion has the potential energy to fuel strides in the right direction. Colleges and universities cannot hide from this responsibility. In fact, they cannot hide from anything as their giant gleaming steel, glass, and marble complexes rise above desolate slums.

To find out how to encourage colleges and universities to move their money, visit the Responsible Endowments Coalition, the leading voice for responsible investing in higher education at www.endowmentethics.org.