U.S. colleges and universities invest a lot of money. We need to think about the future we are investing in.
America has the world's best system of higher education. It is widely available. Its graduates have much higher incomes and lower joblessness than those who do not graduate from college. Students from all over the world strive for the opportunity to attend U.S. colleges and universities. Seventy-seven percent of the graduates of the 130 liberal arts colleges in the Annapolis Group rate the education they received as "excellent" and another 18 percent rate it "good." Among the reasons that American higher education is so good -- along with strong traditions of innovation, independent thought, and academic freedom -- is the generosity of donors. Americans gave over $30 billion to higher education last year. College and university endowments total more than $346 billion.
Endowments provide stability and opportunity. Schools invest the funds to earn returns to pay for things such as financial aid, faculty salaries, research, and innovation. Yet, as "mission driven" (rather than "for profit") institutions, colleges and universities often grapple with the question of whether to apply their values to the way that they invest as well as the way that they spend their funds, even if doing so might diminish their earnings. Many schools have investment policies that screen tobacco and alcohol producers, for example.
My school, Hampshire College, holds deeply ingrained commitments to environmental sustainability and social justice, and has a long tradition of activism on and off campus. Hampshire began to invest its small endowment in accord with its values more than 30 years ago, when it became the first school to pull its funds out of the stock of companies doing business with the apartheid government of South Africa. Last year Hampshire's Board adopted perhaps the most forward-looking and comprehensive investment policy in the country. We now take a proactive approach to aligning our investments with our values. Instead of screening out the shares of companies whose products or practices we disagree with, we seek out and invest in businesses whose:
"...products and policies align with our core values of social responsibility and sustainability... providing beneficial goods and services, pursuing research and development programs that hold promise for new products of social benefit and for increased employment prospects, maintaining fair labor practices and a safe and healthy work environment, demonstrating innovation in environmental protection, [and] using their power to enhance the quality of life for underserved segments of our society..."
Among other changes, our policy has led us to invest in developers of renewable energy technologies rather than the producers of fossil fuels. Our donors gave money to create our endowment as an investment in the future. Our business as an educational institution is to invest in the future. In a rapidly warming world the future of our students will depend on quickly expanding the use of wind, solar power and other carbon-free sources of energy, and deep reductions in the use of fossil fuels.