Rolling in dough, but at what cost?

I apologize for not jumping with joy at the news. These impressive financial figures do seem to be a source of pride to the Yale community, and I suppose that's okay. When people are in the business of making money, as the managers of Yale's endowment are, they should indeed be encouraged when they succeed at this endeavor. And they succeeded.

SARAH ENGLAND/YH

But there are important questions that need to be asked. The first and most fundamental is, "What is the purpose of the endowment?" This is a question that seems trivial and goes unasked far too often, but most people don't know the answer. It isn't simply a game in which investment bankers make money for the sake of making money. Yale is an academic institution, not a for-profit business; making money is not our mission. The best answer that I've heard is that the purpose of the endowment is to insure Yale's long-term financial security. Let's assume this is true. I think it's safe to say that this mission was accomplished several billion dollars ago. Yale's annual operating budget is $1.3 billion, so the endowment is still huge comparatively—we're not going broke anytime soon.

Okay, so we have security and plenty to spare—now what? The next question is, "Where is the money coming from?" We should certainly take ethics into consideration, especially since the original aim of "security" has been more than satisfied. Is it not possible that these highly lucrative investments might be so profitable because they don't take social costs into consideration? They might be at the expense of something or someone in a place far, far away—so far that we at Yale would never have to see or feel the damage.

These are important considerations—perhaps just as important as bragging rights over our rivals in Cambridge. Then the next logical question is, "Should these things be important to Yale, the University?" Rather, should they be important to this institution just because they might be important to members of the Yale community? This could lead to endless debate. But the answer to the former is straightforward: yes. The University claims to take social costs and benefits into consideration when making its investment decisions. After the publication of a book called The Ethical Investor, written by Yale Law Professor John Simon, the University adopted his guidelines for responsible investment barely a month later, back in April of 1972.

Does Yale back up its talk? We know the endowment went up 40 percent last year, but did Yale do this while abiding by the policies prescribed by The Ethical Investor, or by ignoring them?

Distressingly, the answer to this question is a resounding, "We don't know!" These answers are carefully guarded by the powers that be in a Fort Knox-like fashion. The private equities (start-up companies, real estate ventures) that make up around 85 percent of the portfolio are completely secret. The public equities (stocks) are partially known only because federal law mandates that they be. But the votes that Yale makes as a large shareholder in many companies on key resolutions (i.e. social issues) are also confidential. This is where Yale could and, according to its own policy, should be playing its largest role in effecting positive social change.

Thus, my final question: "Why all the secrecy?" Yale claims that it is an ethical institution, and that it cares about the voice and knowledge of the members of its community, but it hides this very significant information. Is it just me, or does it suggest something rather devious? Something we should be concerned about? Something we should take action on? It's something to think about...

Danny Stone is a senior in Davenport. Graphic by Sarah England.

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