Dartmouth’s Financial Piñata

by

‘To the Editor:

Since I arrived in Hanover late last year, I have been moved by the intimacy and kindness of the Dartmouth community, bowled over by the capacity for meaningful scholarly output and impressed by the intense passion Dartmouth inspires.

Christopher C. Schons’ column “Dartmouth’s Investment Practices Raises Troubling Questions” reflects some of that passion, although unfortunately channeled to rehash allegations long ago dismissed by the authorities. He goes over familiar terrain referring to “questions” that have been answered multiple times in multiple venues for multiple audiences. Schons conveniently fails to acknowledge that the college responded to his latest inquiry just two weeks ago. What is worse, in the absence of any facts he uses innuendo to question Dartmouth’s integrity. There is in fact nothing to his assertions.

In October 2012, the New Hampshire Attorney General reviewed the anonymous claims repeated in the Schons column and found “no basis to conclude Dartmouth’s Trustees have violated state law by engaging in related party transactions involving the investment of a portion of Dartmouth’s endowment.”

Moreover, College policy imposes procedures that actually exceed the requirements under the law, including one directing that before being submitted for full Board of Trustees approval, each such transaction must be reviewed and approved by the Board’s Audit Committee, in addition to the Investment Committee.

In addition to this rigorous process, the performance of these related party investments testifies to their soundness. These investments have significantly out-performed the endowment portfolio as a whole over the past 15 years. Dartmouth is fortunate to have such talented and committed alumni on its Board.

As former Chair Ed Haldeman observed several years ago, Dartmouth could have a blanket prohibition on these investments, and if we did, we would never be second-guessed. But returns on the College’s endowment would have been substantially lower and the institution would not be as strong as it is today.

Vigilance, constructive criticism, and innovation help us herald the fine institution that Dartmouth is. Recycling long-ago dismissed allegations does not.

Sincerely,

Thomas W. Bruce
Senior Vice President for Public Affairs
Dartmouth College

First of all, I have not made any allegations. I merely work from the fact, acknowledged by the college, that as of last year 13.5% of Dartmouth’s $3.5 billion endowment (or $472.5 million) is invested with firms controlled by current or past trustees or members of the college’s investment committee. If we assume as financial experts say we should that a 2% annual fee is charged on these funds, that means that nearly $10 million per year is going into the pockets of a handful of individuals associated with Dartmouth’s board of trustees. And that does not include any commissions on profits, which in the hedge fund industry amount to 20% of any gains. If this has been going on at this magnitude for the 15 years cited by Mr. Bruce in his letter, trustee-related firms have netted revenues from Dartmouth totaling well into nine figures. Yet, we are the ones who are “fortunate”?!! As the broadway song goes, being a Dartmouth trustee is “nice work if you can get it.”

Beyond these direct profits, the firms involved also gain the advantage of Dartmouth’s Ivy League imprimatur, which must be invaluable when promoting themselves among prospective clients. Yet the college receives nothing in return for having its name associated with the businesses in question.

As for Dartmouth’s protestation (and the state of New Hampshire’s concurrence) that no illegal acts have been committed, every observant person knows that there is often a breach between what is strictly legal and what is ethical. The college says that “Dartmouth could have a blanket prohibition on these investments, and if we did, we would never be second-guessed.”  That would be the proper route to take.

Dartmouth has decided to endure the appearance of trustee self-dealing because, it says, the financial gains to the endowment were too good to pass up. So, the message sent to the Dartmouth community, current undergraduates included, is: “Don’t worry too much about appearances if you can make an extra buck.” I would argue that a better message would be, “Financial strength matters, but not as much as ethical and reputational standing. And, in fact, you can relatively easily have both.” But the Trustees chose to compromise on one part of that equation.

Ethics aside, the specifics of the performance of the related-party investments remain murky. If it has been so stellar, why didn’t the trustees put 100% of the endowment in these funds? What is the riskiness of these investments? What if they had lost money? Would that change the ethical calculus at all? (It shouldn’t!) Moreover, the total US stock market in Dartmouth’s most recent fiscal year gained over 20%, while the college’s endowment grew by 12.1%. Remind me again who is “fortunate”?

Finally, Dartmouth’s answers (via an alumni liaison) to the specific questions raised in my original piece have been either vague or (mostly) non-existent. Dartmouth alumni still don’t know exactly how nearly half a billion dollars apparently has flowed to firms connected to the board of trustees or its investment committee, what the profits for these firms have been, nor whether any alum with financial acumen would be allowed to pitch investment ideas to the board.

In any case, as a putatively non-profit institution of higher learning, Dartmouth College should not serve as anybody’s financial piñata.

Christopher C. Schons, a graduate of Dartmouth College, lives in Arlington, Va.

This column originally ran in the Valley News

Christopher C. Schons holds an A.B. degree, received magna cum laude, from Dartmouth College. He can be reached at christopher_schons@yahoo.com.

Like What You’ve Read? Support CounterPunch
July 28, 2015
Mark Schuller
Humanitarian Occupation of Haiti: 100 Years and Counting
Lawrence Ware
Why the “Black Church” Doesn’t Exist–and Never Has
Peter Makhlouf
Israel and Gaza: the BDS Movement One Year After “Protective Edge”
Eric Draitser
China’s NGO Law: Countering Western Soft Power and Subversion
Paul Craig Roberts - Dave Kranzler
Supply and Demand in the Gold and Silver Futures Markets
Carl Finamore
Landlords Behaving Badly: San Francisco Too Valuable for Poor People*
Michael P. Bradley
Educating About Islam: Problems of Selectivity and Imbalance
Binoy Kampmark
Ransacking Malaysia: the Najib Corruption Dossier
Michael Avender - Medea Benjamin
El Salvador’s Draconian Abortion Laws: a Miscarriage of Justice
Jesse Jackson
Sandra Bland’s Only Crime Was Driving While Black
Cesar Chelala
Effect of Greece’s Economic Crisis on Public Health
Mel Gurtov
Netanyahu: An Enemy of Peace
Joseph G. Ramsey
The Limits of Optimism: E.L. Doctorow and the American Left
George Wuerthner
Bark Beetles and Forest Fires: Another Myth Goes Up in Smoke
Harvey Wasserman
Will Ohio Gov. Kasich’s Anti-Green Resume Kill His Presidential Hopes?
Jon Langford
Mekons Tour Diary, Episode 4, a Bowery Ballroom Blitz
July 27, 2015
Susan Babbitt
Thawing Relations: Cuba’s Deeper (More Challenging) Significance
Howard Lisnoff
Bernie Sanders: Savior or Seducer of the Anti-War Left?
Martha Rosenberg
Big Pharma’s Profiteers: You Want Us to Pay What for These Meds?
John Halle
On Berniebots and Hillary Hacks, Dean Screams, Swiftboating and Smears
Stephen Lendman
Cleveland Police Attack Black Activists
Patrick Cockburn
Only Iraq’s Clerics Can Defeat ISIS
Ralph Nader
Sending a ‘Citizens Summons’ to Members of Congress
Clancy Sigal
Scratch That Itch: Hillary and The Donald
Colin Todhunter
Working Class War Fodder
Gareth Porter
Obama’s Version of Iran Nuke Deal: a Second False Narrative
Joshua Sperber
What is a President? The CEO of Capitalism
Zoe Konstantopoulou
The Politics of Coercion in Greece
Vacy Vlanza
Without BDS, Palestine is Alone
Laura Finley
Adjunct Professors and Worker’s Rights
Jon Langford
Mekons Tour Diary, Episode Three, Where We Thrill Everyone by Playing Like “Utter Bloody Garbage”
Weekend Edition
July 24-26, 2015
Mike Whitney
Picked Out a Coffin Yet? Take Ibuprofen and Die
Henry Giroux
America’s New Brutalism: the Death of Sandra Bland
Rob Urie
Capitalism, Engineered Dependencies and the Eurozone
Michael Lanigan
Lynn’s Story: an Irish Woman in Search of an Abortion
Paul Street
Deleting Crimes at the New York Times: Airbrushing History at the Paper of Record
ISMAEL HOSSEIN-ZADEH
Making Sense of the Iran Nuclear Deal: Geopolitical Implications
Andrew Levine
After the Iran Deal: Israel is Down But Far From Out
Uri Avnery
Sheldon’s Stooges: Netanyahu and the King of Vegas
David Swanson
George Clooney Paid by War Profiteers
ANDRE VLTCHEK
They Say Paraguay is in Africa: Mosaic of Horror
Horace G. Campbell
Obama in Kenya: Will He Cater to the Barons or the People?
Michael Welton
Surviving Together: Canadian Public Tradition Under Threat
Rev. William Alberts
American Imperialism’s Military Chaplains
Yorgos Mitralias
Black Days: August 4th,1914 Germany and July 13th, 2015 Greece