FacebookTwitterRedditEmail

Dartmouth’s Financial Piñata

‘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

More articles by:

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

bernie-the-sandernistas-cover-344x550
September 17, 2019
Mario Barrera
The Southern Strategy and Donald Trump
Robert Jensen
The Danger of Inspiration in a Time of Ecological Crisis
Dean Baker
Health Care: Premiums and Taxes
Dave Lindorff
Recalling the Hundreds of Thousands of Civilian Victims of America’s Endless ‘War on Terror’
Binoy Kampmark
Oiling for War: The Houthi Attack on Abqaiq
Susie Day
You Say You Want a Revolution: a Prison Letter to Yoko Ono
Rich Gibson
Seize Solidarity House
Laura Flanders
From Voice of America to NPR: New CEO Lansing’s Glass House
Don Fitz
What is Energy Denial?
Dan Bacher
Governor Newsom Says He Will Veto Bill Blocking Trump Rollback of Endangered Fish Species Protections
Thomas Knapp
Election 2020: Time to Stop Pretending and Start Over
W. Alejandro Sanchez
Inside the Syrian Peace Talks
Elliot Sperber
Mickey Mouse Networks
September 16, 2019
Sam Husseini
Biden Taking Iraq Lies to the Max
Paul Street
Joe Biden’s Answer to Slavery’s Legacy: Phonographs for the Poor
Paul Atwood
Why Mattis is No Hero
Jonathan Cook
Brexit Reveals Jeremy Corbyn to be the True Moderate
Jeff Mackler
Trump, Trade and China
Robert Hunziker
Fukushima’s Radioactive Water Crisis
Evaggelos Vallianatos
The Democrats and the Climate Crisis
Michael Doliner
Hot Stuff on the Afghan Peace Deal Snafu
Nyla Ali Khan
Spectacles of the Demolition of the Babri Masjid in Uttar Pradesh and the Revocation of the Autonomous Status of Kashmir
Stansfield Smith
Celebrating 50 Years of Venceremos Brigade solidarity with the Cuban Revolution
Tim Butterworth
Socialism Made America Great
Nick Licata
Profiles in Courage: the Tories Have It, the Republicans Don’t
Abel Prieto
Cubanness and Cuban Identity: the Importance of Fernando Ortiz
Robert Koehler
Altruists of the World Unite!
Mel Gurtov
Farewell, John Bolton
Weekend Edition
September 13, 2019
Friday - Sunday
Paul Street
The Age of Constitutional Coups
Rob Urie
Bernie Sanders and the Realignment of the American Left
Anthony DiMaggio
Teaching the “War on Terror”: Lessons for Contemporary Politics
Jeffrey St. Clair
Roaming Charges: They Are the Walrus
T.J. Coles
Jeremy Corbyn: Electoral “Chicken” or Political Mastermind?
Joseph Natoli
The Vox Populi
Sasan Fayazmanesh
The Pirates of Gibraltar
John Feffer
Hong Kong and the Future of China
David Rosen
The Likely End to Roe v. Wade?
Ishmael Reed
When You Mess With Creation Myths, the Knives Come Out
Michael Hudson
Break Up the Democratic Party?
Paul Tritschler
What If This is as Good as It Gets?
Jonah Raskin
Uncensored Tony Serra: Consummate Criminal Defense Lawyer
Ryan Gunderson
Here’s to the Last Philosophes, the Frankfurt School
Michael T. Klare
The Pompeo Doctrine: How to Seize the Arctic’s Resources, Now Accessible Due to Climate Change (Just Don’t Mention Those Words!)
Luke O'Neil
I Would Want To Drink Their Blood: God Will Punish Them
Louis Proyect
The Intellectual Development of Karl Marx
FacebookTwitterRedditEmail