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Nonprofit Newswire | Harvard, Dartmouth, Others Helped Deepen Economic Crisis

Rick Cohen
May 24, 2010
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May 20, 2010; Source: BusinessWeek | The Center for Social Philanthropy at the Tellus Institute released a report this week suggesting that the investment decisions of nonprofit universities with mammoth endowments—Harvard, Dartmouth, MIT, Boston College, Boston University, and Brandeis—worsened the nation’s economic crisis because their investment managers “succumbed to Wall Street’s influence” and “took on too much risk.” According to Tellus, “The endowment model of investing is broken. Whatever long-term gains it may have produced for colleges and universities in the past must now be weighed more fully against its costs—to campuses, to communities and to the wider financial system that has come under such severe stress.”

The report highlighted rampant conflicts of interest among the universities’ investment overseers. The trustee committees in charge of making and monitoring investments are largely comprised of people from the financial sector, with lots of connections to the investment options the universities might choose. Even if they recuse themselves from specific decisions, their influence is directly or indirectly felt.

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What concerns us at NPQ, however, is a part of the report that moves from looking at endowment investments to criticizing the six universities for their tax exempt properties and, according to the authors, low payments in lieu of taxes—Tellus estimates that the schools own $10.6 billion in tax exempt real estate which would have generated $235 million in taxes without the exemption, but have been allowed to make payments in lieu of taxes generating only 5 percent of that.

The report was funded partly by the Service Employees International Union (SEIU), which represents some workers at these schools and many employees working in local and state government agencies. NPQ has long raised questions about how tax exempt endowments might be better invested for social value, but the link here between the endowment argument and the tax exempt property issue looks a bit tenuous and perhaps linked to other SEIU agendas.—Rick Cohen

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ABOUT THE AUTHOR
Rick Cohen

Rick joined NPQ in 2006, after almost eight years as the executive director of the National Committee for Responsive Philanthropy (NCRP). Before that he played various roles as a community worker and advisor to others doing community work. He also worked in government. Cohen pursued investigative and analytical articles, advocated for increased philanthropic giving and access for disenfranchised constituencies, and promoted increased philanthropic and nonprofit accountability.

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