*Updated April 13, 2017
- What is the purpose of the Mount Holyoke College endowment?
- Who is responsible for overseeing these funds and deciding the College’s investment goals?
- Where do these funds come from and what is their current value?
- How are distributions from the endowment used to support the mission of the College?
- How much of the College’s portfolio is invested in fossil fuels?
- What have been the College’s deliberations on fossil fuel divestment?
- How does the Board of Trustees handle conflicts of interest or the appearance of conflict of interest when voting on issues like divestment?
- Have the Board or other MHC officials considered the views of students and other groups regarding divestment?
- What have been the actions of MHC’s peer institutions regarding the question of divestment?
- What are the arguments for and against divesting from fossil fuels?
- What is the College doing to address climate change and increase sustainability on campus?
What is the purpose of the Mount Holyoke College endowment?
The Mount Holyoke endowment is the foundation that allows us to fulfill the College’s mission of providing an intellectually rigorous education for students of all backgrounds and it therefore strengthens our legacy of leadership in educating women. We rely on the endowment for 26 percent of our annual operating budget.
The intent is to invest strategically to grow the endowment at a rate that both supports current distributions for College operations and ensures that future generations of students and faculty can enjoy the same level of support – while keeping in mind inflation.
Who is responsible for overseeing these funds and deciding the College’s investment goals? The Board of Trustees is responsible for overseeing the endowment and has established an Investment Committee to implement this work. The Investment Committee is made up of alumnae with the appropriate skills and knowledge to oversee an investment pool of this size and complexity. All are investment professionals who are deeply committed to the long-term success of Mount Holyoke College.
The Investment Committee is supported by our long-time portfolio consultants, Cambridge Associates, who help monitor current performance, screen potential new investment managers and benchmark performance against indices and peers.
Where do these funds come from and what is their current value?
The endowment represents the cumulative generosity of many donors over many decades to support our academic mission. As of December 31, 2016, the endowment’s value was $691 million.
How are distributions from the endowment used to support the mission of the College?
Distributions from the endowment amount to approximately $36 million this year and contribute 26 percent of the College’s annual operating budget. Donors who have established endowment funds determine how the income will be used in support of the College. The two largest areas of support are $11.9 million to be used for student scholarship aid (33 percent of the total endowment distribution) and $8.4 million for faculty salaries (23 percent of the total endowment distribution). Eight in 10 Mount Holyoke students receive some form of financial aid. Other large areas of support include unrestricted operating support, the academic centers and the Art Museum.
How much of the College’s portfolio is invested in fossil fuels?
Currently, the College has no direct investments in companies among the top 200 publicly traded fossil fuel companies. In fact, we have no direct investments whatsoever: every dollar in our endowment is invested in commingled funds (similar to mutual funds on the consumer side). What does that mean? Although only one percent of our total endowment, or approximately $7 million, is invested in publicly traded fossil fuel companies, a decision to divest would require the College to sell over one-third of its current endowment.
The College also invests a portion of the endowment in private partnerships. Fossil fuel holdings in this sector represent less than five percent of the endowment. Divesting both the public and private funds in our endowment with exposure to fossil fuel companies would require the College to sell approximately $337 million, or approximately one-half of the endowment.
What have been the College’s deliberations on fossil fuel divestment?
The Board’s Investment Committee began studying this topic four years ago. During that time period, at the Committee’s behest, Cambridge Associates has aggressively increased its efforts to invest in socially responsible, renewable and sustainable energy sources. In 2014 and 2015 the Investment Committee chose to invest the endowment in two such funds totaling $6 million. The Committee is committed to continuing to look for additional investment managers with strong track records in this area.
How does the Board of Trustees handle conflicts of interest or the appearance of conflict of interest when voting on issues like divestment?
Trustees and others with significant responsibility for Mount Holyoke are bound by a conflict of interest policy which states they have a fiduciary duty of loyalty to the college. Whether an actual conflict or an appearance of a conflict, Trustees recuse themselves from voting on those issues.
Given the appearance of conflict, several Trustees recused themselves from voting on the divestment policy decision. To clarify what it means to recuse oneself from a vote: those who recuse themselves from the vote do not participate in the dicussion leading up to the vote so as to ensure that they do not influence the outcome.
Have the Board or other MHC officials considered the views of students and other groups regarding divestment?
The Investment Committee and other members of the Board and Officers of the College have met with student members of the Climate Justice Coalition (CJC) several times over the past four years. The CJC presented to the Investment Committee and Cambridge Associates in December 2014 and to the full Board in September 2016, in addition to other meetings and communications. Cambridge Associates has provided information to the CJC and to the Faculty Planning and Budget Committee’s Ad Hoc Task Force on Fossil Fuel Divestment.
What have been the actions of MHC’s peer institutions regarding the question of divesting?
Many of our peer institutions, including Amherst, Bowdoin, Bryn Mawr, Carleton, Colby, Middlebury, Oberlin, Pomona, Swarthmore, Vassar, Wellesley, Wesleyan and Williams, have voted not to divest, as have large institutions including Brown, Columbia, Cornell, Dartmouth, Harvard, MIT, Princeton and University of Chicago.
Others have taken a variety of steps. The Smith College board of trustees has not voted to divest of the approximately 6 percent of its endowment in fossil fuels, but has formed a study group to determine how the college might best contribute to climate change solutions. Hampshire did not divest from its commingled funds, but has reaffirmed its intention to work proactively with fund managers. The University of Massachusetts eliminated its direct investments in fossil fuels, leaving a $5 million fossil fuel investment in its endowment. Barnard’s board announced a plan March 4 to divest from fossil fuel companies that deny climate science or “otherwise seek to thwart efforts to mitigate the impact of climate change.” Approximately 7 percent of Barnard’s endowment is in fossil fuels.
What are the arguments for and against divesting from fossil fuels?
Climate change is one of the defining issues of our lifetime. Proponents of divestment argue that entities have a responsibility to divest because fossil fuels have been proven to significantly impact climate change. Scientific evidence indicating the rise in the planet’s surface warming is mounting around the world and assumptions and findings about climate change are continually analyzed and tested.
Opponents of divestment contend that the very small percentage of fossil fuel investments, which are commingled with others funds, would require the College to liquidate virtually its entire public equities portfolio. Taking this step is not guaranteed to influence others or impact climate change, and would potentially put the College at a measurable financial disadvantage both today and for future students.
What is the College doing to address climate change and increase sustainability on campus?
The College has intensified its focus on sustainability and will continue to do so moving foward. The Plan for Mount Holyoke 2021 outlines the College's commitment to envioronmental sustainability and calls for a reduction in our environmental footprint, a strengthening of our environmental curriculum and the engagement of the broader community. To help us achieve the Plan's goals, the Mount Holyoke Sustainability Taskforce will evaluate existing commitments, recommend ways to advance environmental sustainability on campus and identify opportunities for progressive action. The Miller Worley Center for the Environment will continue to advance a culture of sustainabilityand environmental awareness while preparing leaders to think critically, imaginatively and globally about the future of our planet.