Last weekend, October 9th and 10th, the Responsible Endowments Coalition held their 7th National Conference at Columbia University in New York City. Students and faculty came from all over, Boston to St. Louis, Oregon to North Carolina, California to Pittsburgh, and even Canada. These activists and organizers gathered to attend workshops, discuss strategy, and have a bit of fun. However, I think we all walked out with a little bit more than we had originally anticipated.
For me the conference started very late Friday night, when two people who were at that point strangers to me from the University of Pittsburgh buzzed up to my Bronx apartment. I was expecting them, of course. The hostel where everyone was supposed to sleep had run out of room for all of the REC attendees so I offered my couches as extra sleeping space. After some getting to know one another I let them get to bed.
Fast-forward to 7 A.M. Saturday morning, when I woke up after less than four hours of sleep. I realized I had forgotten to print out my script for the workshop I was leading, not to mention the schedule for the day. Needless to say I was worried about what laid ahead. Trying not to wake my guests up, I poured a cup of coffee and ran out the door at 7:30 hoping to make it to the hostel on 104th Street around 8:15. The MTA didn’t like my plan however, and decided 8:25 was a more appropriate time for me to arrive. I met Martin, REC’s national organizer and a few other staff members, not the mention the room full of student activists, for coffee and bagels before heading over to the conference center at Columbia.
After making a quick round to make sure everyone was out of bed and ready to get going, we started out for our destination. The only problem was that I had no idea where any of my fellow Fordham activists were, not to mention the two Pittsburgh people I had made them responsible. I was getting a little nervous. After arriving at the conference center and sending out a few strongly-worded text messages, I began to relax as I drank my third cup of coffee, and Dan and Martin introduced the conference.
My first workshop was “Student Power: Organizing and Envisioning Democracy in Higher Education” presented by Patrick St. John and Tristan Husby. I was really blown away by the historical and social context they brought to the student movement. The two began by introducing the concepts of the “university” and “student power” and then moved onto discussing the history of the structure of higher education, pointing out that in the 14th century, when universities first started popping up, there existed a student run university. We talked about what a student run university could look like and how we could get there, not to mention discussing why its important to use prefigurative politics.
After lunch, and another cup of coffee and two cans of coke (I was on a bit of a caffeine high by this point), it was my turn to run a workshop with my fellow REC community investment campaign organizer from Tufts, Caroline Incledon. This was what I had been looking forward to (and simultaneously dreading) for weeks now. It was our job to introduce these students to Community Investment and convincing them that they could move their university’s money out of the big banks that caused the financial crash. The presentation went great though, with the help of Dan, REC executive director (although he won’t like me saying so). We talked about different kinds of Community Development Financial Institutions (CDFIs) and how we could use the economic recession to prove to our university administrations that investing in our local community not only will help residents of the depressed areas our universities are located in, but will be a way of telling the big banks we don’t approve of their practices.
After that the Keynote Panel, Sarah Ludwig from the Neighborhood Economic Development Advocacy Project and Leslie Lowe, a consultant for several SRI industry organizations, presented on the practices of banks like Chase, how practices like sub-prime mortgage lending are the natural successor to the practice of redlining, systematically denying loans to low-income communities and especially communities of color. They also showed how universities and other institutional investors can fight back. All in all it was very inspirational.
Next I attended the “Moving your Money” workshop led by Vonda Brunsting from the Service Employees International Union, who gave us ideas about how to get individuals and especially universities to break up the big banks by moving their accounts away from Chase, Bank of America, etc and into small community banks and credit unions, just like many pension funds, labor unions, and other institutional investors have been doing for years.
The day ended with a walk back to the Hostel for some pizza and open discussion. Unfortunately I wasn’t able to attend the any of the “open spaces” as they are called, because I met with some people to discuss REC’s Steering Committee, possibly one of my favorite aspects of the organization. It is a group made up of entirely students that is meant to advise REC’s Board of Trustees, to make sure that we always remain driven by the needs of the actual students. Talk about democracy in action!
While many others went out to bars and to sightsee in the city, I headed home for some much needed rest. The morning came too quickly once again, and I found myself back at Columbia soon enough sitting in Cheyenna Weber’s, REC’s former national organizer, workshop “Creating Sustainable Activist Cultures,” where we discussed how to created long-term movements and avoid burnout for others and especially ourselves. The entire conversation made me think very seriously about the campaign I’m running at Fordham and how to make sure that it is always enjoyable so that I don’t get burnt out too quickly.
The last workshop was presented by Yotam Marom, a NYC activist formerly from the New School and member of the Organization for a Free Society (not to mention a good friend of mine). He led a workshop called “The Movement Inside and Out,” about how to structure our movements so we promote diversity and inclusiveness, not to mention challenge multiple sections of social life (the economy, sexism, racism, etc) while organizing for social change.
Finally the conference ended with us going around “RECognizing” (get it?) all the people we wanted to thank for making the weekend memorable. After eating another leftover bagel from breakfast, giving a few directions to out-of-towners, and chatting with some people, I finally went home, happy with a successful weekend and my first REC conference of what I’m sure will be many.
I’d like to thank Martin, Dan, and all my fellow REC Student Organizers, and especially all the students from around the country for coming and making REC’s National Conference something truly great, and for doing all the great work we all do on our campuses. Here’s to us getting a better world. We’ll make it happen soon enough.
REC Interview: Steve Schueth, First Affirmative Financial Network - Perspectives on 20 years of work in responsible investment
REC: How did you get involved with responsible investment?
I went to school at Marquette where basketball was the big thing, and we didn’t have anything like the Responsible Endowments Coalition. I had a gradual awakening, but I wish that he had woken up earlier when I was in college, it was 14 years before I got into socially responsible investment.
I joined Calvert in 1989. Previously I had been the director of development at the University of Pennsylvania Wharton School of Business and then was working in the financial services industry. While I was there I met Wayne Silby and John Guffey who founded Calvert in 1981 and were integrating values into investment and learning about the Buddhist tradition and philosophy of ‘right livelihood’, which was a big aha! moment for them. I had been in financial services since 1976 and when I began to learn about the emerging field of socially responsible investing, doing good with money, it was a coming home, it just felt right for me.
For me there are two kinds of people in the world. The majority of folks feel very comfortable having their money disconnected from the rest of their lives. They are okay making as much money as they can and giving a little bit away to solve some of the world’s problems. They aren’t as socially conscious.
The other group of folks is people that are doing good work with their money. We want our money doing good things and making money at the same time. We’re conscious how our money is working in the world and know that it has an impact if we realize it or not. I would have been very grateful if I had realized this in college.
REC: It’s the same way now for a lot of people.
In college most people are thinking about sports and boys and girls. It’s hard to break through the excitement that is happening and the process of leaving home. REC has an important role to play bringing these insights and ideas to students.
REC: Why do you think colleges and universities should be involved in responsible investment?
Think Sustainability. It can be applied to just about everything, companies, colleges, countries, planet. This idea of being sustainable so that everyone lives well for a long time—forever, hopefully—built into that concept is long-term thinking. Schools are places for cultivating long-term thinking. Institutions are long-term investors. Colleges and universities have a really important role shifting the paradigm from short-termism to long-termism. If you look back at the genesis of most of the problems in most of the markets, most of it can be traced to short-term thinking. Even if a college doesn’t get to the point to invest in a more socially conscious way—it needs to spread the message about long-term.
I’ve been involved in some efforts of the last 20 years on responsible investment campaigns on campus. In all cases a small group of committed students was lobbying the university with professional support, and the university successfully stalled and the passion died. REC plays an important role in keeping that flame alive.
Changing policies at schools is challenging: there are many interests. I would not approach them with exclusionary concepts. Encourage them to approach investing by weighting their portfolios with the most responsible corporations.
If you happen to be where, say, Altria is located, you don’t want to totally exclude that stock, but can own less of them. Sustainability in investing is not only very doable, but frankly is necessary.
REC: What message would you send to students advocating for positive changes to investment policies on their campuses?
SS: Students are thinking long-term. Socially conscious investors are very long-term. Investors tend to be there every year. That discipline is important. If you can establish institutional memory, that’s incredibly helpful. You need to be smart about identifying pressure points. Understand the climate and players, and who has influence. If you understand the situation you can be much more effective and efficient in the way you are advocating for change. Maintain information for and educate the next group of students.
REC: How would you convince a university to make community investments?
SS: I think the best is working with a local organization. You can also use an organization like the Calvert Foundation, which can focus on your local area, but get important diversification. Some mutual funds do community investment like Community Capital Management’s CRA Fund and Access Capital Strategies. Pretty much all of our clients get some exposure and don’t even know it. Fixed income in community investments is very competitive.
Also, understand the culture of the situation and the politics. Be positive with trustees and talk about how admirable it is that they are for working with the university. Talk about how from an investment perspective you need to think about the future of the world your students are graduating into, a conversation that can lead to a more conscious set of decisions.
Also, students might remind them of the LA Times investigative report on the Bill and Melinda Gates Foundation where they were invested in companies causing the diseases where they were building clinics. There was such a cognitive dissonance.
REC: Anything you’d like to add?
SS: More and more clients are interested in the advocacy that we are doing. They are interested in what we’re doing to poke and nudge companies to be better corporate citizens and to identify companies embracing sustainability. From a client perspective there does seem to be a shift towards a social improvement type of strategy and there is more recognition that companies have a huge impact on quality of life.
I see a massive erosion of trust in both government and companies. People have turned to us to manage money in a different way. If you have board members and people who are mistrustful, you can use that approach. You can also look at qualitative analysis of impacts, behaviors, and culture. Sometimes research is a way to open eyes and open minds.
Endowment transparency has been quite a buzzword in the student movement for the last few years, at least it seems to have become one since I joined the “movement” three years ago after becoming an activist at Fordham University in the Bronx, NY. And there’s good reason for that. The endowment is basically the savings account of the university, although instead of being invested in one bank, it is put in various banks, corporations, bonds, mutual funds, and other types of investments. The point of this institution, to put it simply, is to make money. The endowment gets returns on its investment, which can be used in the university’s operating budget, to hire new teachers, staff, to build new buildings, dorms, and athletic facilities, or just put back into the endowment and reinvested.
So why do we care? Because it’s our school, our reputation, and because our tuition is an investment in Fordham. And just like Fordham, we want to see our money used for the right purposes, so we want transparency. We want to know that Fordham isn’t invested in a company like BP, which caused major and most likely irreversible environmental damage to the Gulf Coast, or like Blackwater, the private military contractor which profits off of two unjust wars in the Middle East.
Instead of trying to find out what is in the endowment or where the budget is invested and then trying to change it, we think we have a better way. Why not just try to move the money ourselves out of the big corporate banks and into credit unions and community banks. This way, we know where a large portion of the university’s money is and we know its being used to promote social and economic justice.
Fordham is a private school and thus has no legal obligation to show us the endowment. Believe me, I’ve asked and the administration has no desire whatsoever to let us know how our and the university’s money is being used. Transparency movements are huge undertakings that usually end in compromise at best and a standstill or backpeddling of the campaign at worst. Ask the students from Take Back NYU, the New York University student group which occupied a building last year demanding transparency and wound up getting arrested, suspended, and almost expelled.
I believe we should have transparency, but I also know that here at Fordham University, at this point, that is next to impossible. On top of that, say we actually get transparency and find out Fordham is invested in a company with terrible environmental practices. Then we would have to launch a whole new campaign to either get our university to divest or to write up shareholder proxies and try to change the company within, both of which could be long and arduous processes. We’d have to organize two different movements simultaneously or one after another.
We want our money to be put to good use, so we should make sure it is by getting Fordham to take its money out of the big banks and put them into community ones. This practice is called community investment: getting Fordham to take its cash assets, mainly those of the endowment and of the operating budget (the “checking account” of the university used to pay wages, salaries, bills, and so on), out of whichever corporate bank it's invested in - Bank of America, Chase, etc., the same banks which helped cause our current economic recession, - and reinvest it into Community Development Financial Institutions, namely credit unions and community banks which specialize in providing financial services like loans and credit to individuals and small businesses from low-income communities.
By doing this we are accomplishing a number of things. First, because we got the money moved, we know where it is and what it is being used for. This empowers students and the university community by demonstrating that we have the power to put forth a productive and beneficial initiative with some of Fordham’s money, instead of simply watching it sit in the bank.
Second, we’ve done some good for people who needed help. Fordham is a university that seeks to create “men and women for others,” giving students the tools to make other people’s lives better. By Fordham investing its money in credit unions or community banks, we’ve provided a degree of economic empowerment to the Bronx, an area that has historically been disempowered on so many levels.
Finally, we sent a message to the corporate banks, the CEOs, and hedge fund managers. That message is that we don’t have to use your system. By moving our money we are challenging an economic system set up to only work for those at the top, while ignoring the rest of us. When we move our money we tell the big banks that if they won’t give us what we need we’ll find it elsewhere.
It is time to move beyond just transparency. If we want a more democratic university, if we want a better economic system, if we want justice for the Bronx, then we want community investment. We want Fordham to move its money away from the big banks and into our community.
This year we also infused quite a bit of new energy and material into the week. Dan gave a thorough overview of community investment as an effective strategy to empower communities and make a statement against the practices of the big banks. Julian Hattem from the Huffington Post joined us for a discussion of the success of the Move Your Money campaign, and Vonda Brunsting from SEIU discussed their efforts to move institutional money away from big banks and towards local institutions.
Overall we had a great week. Thanks to Starlet, Dave, and Jack for joining us – it was great to meet you and hear your contributions! As for the participants in this year’s student organizer program, you’ll be learning a little bit more about them soon. Thank you also to the Jessie Smith Noyes Foundation, the National Federation of Community Development Credit Unions, the Center for Place, Culture and Politics at the CUNY Grad Center, and the SEIU New York Regional Office for hosting us. Without you none of this would have been possible!
Interested in attending a future REC training? We plan on holding them every summer and winter. Email firstname.lastname@example.org and watch our ‘upcoming events’ section to learn more!
by Steve Flynn, Greensboro, North Carolina
Over half the children in Guilford County Schools live below the poverty line. Nearly 50 percent of males of color are no longer in school after the age of 16. Accordingly, our high schools then proudly champion ‘graduation rates’ of 100%. Where do many of those young men end up? Even those kids who do graduate and go on to college and graduate, where exactly are they going to find jobs?
We see the building of our city’s new prison taking shape downtown, we witness the decades long struggle between Greensboro’s police department and its citizenry east of Murrow Boulevard. We know in our hearts where many of those young men are ending up, if we choose to listen.
Some of us wonder what institutions will step up and work toward community solutions in terms of sustainable economic development. Today I want to begin a discussion about Greensboro’s higher education institutions and how they can envision together becoming part of the community’s solution and not, as so many at the grassroots feel, part of the problem.
I’ve been a member of Greensboro’s higher education community, in various flavors, for nearly two decades. Having previously worked in international educational exchange that took me around the world, one comparative thing I’ve come to learn is that one of American culture’s truly unique and amazing things is the capacity of American college graduates to give back to their alma maters. As a city of colleges and universities, this wonderfully charitable spirit is alive and well here in Greensboro.
This is something that speaks well of us: our spirit of giving.
I attended the US Social Forum in Detroit a couple of weeks ago and learned of the Responsible Endowments Coalition (REC). One of REC’s main goals is to teach and train college students to organize advocacy campaigns to harness small percentages of university endowment dollars for the purpose of local community investment. In Detroit I gathered committed Greensboro students from North Carolina A&T, University of North Carolina at Greensboro, Guilford College and other local schools to meet with the REC people. Those meetings in Detroit were transformative and I’m confident the student activists in our community’s Colleges and University’s will be moving the ball forward this coming year.
My own personal dog in this hunt is to begin similar conversations at the leadership level. The students discussed above will no doubt soon begin pushing these new ideas and values from the bottom up among Greensboro schools (indeed, this has already begun). I would like to help nurture the conversation from the top down so that just maybe we can meet each other in the middle or somewhere on behalf of our community and the citizens of North Carolina.
If we’ve learned anything in at least the last couple years, it is that the world of Tom Wolf’s ‘Masters of the Universe’ and Oliver Stone’s Gordon Gecco have born strange fruit. Previous truths about how assets and wealth are ‘made and accumulated’ are suddenly called into question. As a global culture, it seems we are currently in search of new ideas for what economic development and sustainability and knowledge production now mean.
I believe American Universities need a new paradigm as it relates to philanthropy and investment. We are expert at and resource significantly our planned giving enterprises on our campuses. Yet, our ‘expertise’ in terms of soliciting gifts goes only so far. In terms of actual investment decisions by investment managers, we typically outsource such expertise to ‘outsiders’ such as Cambridge and Associates (in the case of University of North Carolina-Greensboro I believe). The result? However good or bad our endowment returns each year (and its moral and sustainable impacts) how much of our endowment income and investments are actually directly benefiting our own community? I have no idea, since such information is not available in the opaque universe of endowment investing, but I would venture to say the answer might be none.
We are currently living in a world where assumed paradigmatic truths (which evolved over the last 30 or so years) about capitalism and high finance are now in question. Universities trained and staffed the whiz kids on Wall Street and London that got us into this mess. Having trained them, universities assumed these whiz kids would do right by university endowments. In the wreckage of 2008, where did that get us?
What do universities have to show for it? Far more importantly, what are our local communities gaining when we outsource our own investment management? I believe new thinking is the way of the world in the coming century and universities seeking relevance must change their approach.
After a five-hour drive from Middlebury, Vermont to New York City, I climbed the stairs of an apartment building and opened a door onto a living room full of organizers. In the hours to come, I met about a dozen students from schools like Mount Holyoke, Bard and Sarah Lawrence. They were all there for the same reason: to talk about community investment. They had flown, driven and bussed in from around the country to attend a REC training and a face-to-face Steering Committee meeting. The goal of the weekend training was to inform us about the nuances of community investment and how it might be implemented on our individual campuses, and to hold a Steering Committee meeting in person. Over the two-and-a-half day period, we explored the traditional definitions of community investment and created our own individual, nuanced definitions. We shared models of existing community investment programs at schools such as Mount Holyoke, Tufts and Seattle and created model campaigns for individual campuses that do not yet have community investment. On Sunday, we held a Steering Committee meeting in person and worked on the REC national campaign of community investment.
As a Student Organizer for REC and a campus organizer at Middlebury College, I can honestly say that the community investment training was one of the most productive environments I have experienced yet. Everyone came to the table with a unique perspective and a base level of knowledge on the topic. We strategized on both a national level and an individual level, each leaving with a plan for implementation on our home campuses. I hope that this level of productivity can continue in our future SRI efforts.
Their buildings were not earthquake or hurricane proof, their airport tiny, and their port outdated. As the world has rightly rushed to the rescue, the relief efforts have been both helpful and extremely problematic. At a minimum, hundreds of thousands of people are still living on the streets, and many are going hungry.
Recently, though, the conversation has turned to the long-term rebuilding of Haiti.
As citizens, we must encourage our government to ensure that we support Haiti to build a sustainable and just economy for its entire population. As donors and investors, we have an opportunity to support that development.
One way is to support the organizations on the ground doing this work. For example, REC supporter Sister Pam Buganski’s group, the Sisters of Notre Dame in Toledo, Ohio, has been investing in Fonkoze, Haiti’s Bank for the Organized Poor, for the past two years, and plans to continue to do so. Writing recently, she said that their investment allowed them to “be with the people of Haiti before and during the earthquake and allows them to support the rebuilding of the people in the country” in its aftermath.
As investors, though, you, and I, and the institutions that we are part of, especially colleges and universities, have an opportunity to make a long-term difference by investing in just and sustainable economy. Aren’t those the kind of returns we really want to make?
written by Jay Cassano, New England Student Organizer
In April of 2008 Vermont became the first state in the country to approve the low-profit limited liability company (L3C) as a legal business structure. Throughout 2009 the L3C business entity has been growing in recognition, having been ratified by the states of Utah , Michigan , Wyoming , and Illinois . It is also currently being considered by state legislatures in North Carolina, Georgia, Oregon, North Dakota, Tennessee, Montana. In addition, the L3C structure has been ratified by the Crow Indian Nation and the Oglala Sioux Tribe. The fact that Native American communities, which are easily some of the most disenfranchised peoples in the United States, want to make use of the L3C business entity shows that it has significant potential as a vehicle for social good.
The L3C is legally very similar to a limited liability corporation (LLC). LLCs were designed to provide a flexible business structure for small businesses that would have some of the benefits of partnerships and sole proprietorships while limiting the financial risks to members of the LLC. The main difference between L3Cs and LLCs is that L3Cs streamline the process of meeting the requirements for the IRS's Program-related Investment (PRI) regulations by being specifically structured in their legal code to already meet those regulations. PRIs are a class of investments that are generally used by private foundations in order to meet their tax exempt requirements; private foundations are required to either donate five percent of their assets to social programs or to invest five percent in socially beneficial program-related investments, which are investments that would not be made by an investor whose primary motivation was financial return.
The organization that is promoting the adoption of the L3C, Americans for Community Development , describes the L3C as “a new form of limited liability company which combines the best features of a for-profit LLC with the socially beneficial aspects of a nonprofit. It is a for-profit with a nonprofit soul.” L3Cs must include in their charter that their purpose is primarily to be socially beneficial and that earning profit is secondary to their social mission. Some anticipated uses of the L3C structure include newspapers, museums, symphonies, recreational facilities, and certain types of community development projects.
Because L3Cs are allowed to earn a profit, they are not 501(c)3 nonprofit charitable organizations. This means that they will not be attractive to individual donors looking only for tax exemption. But the strength of L3Cs is that they do not compete for these donations, but rather open up a completely underdeveloped field for institutional investors such as private foundations. Because of the complexity and investment of time involved for investors to file and process paperwork for PRIs, many private foundations do not currently make use of PRIs, preferring to meet their exempt requirement through donations to 501(c)3s. Because the L3C is designed to specifically comply with PRI regulations, foundations making PRIs in L3Cs are allowed to skip the bulk of the paperwork involved with filing a PRI. In this way L3Cs position themselves strategically between nonprofits and for-profits. Another advantage of L3Cs is that they are legally allowed to tranch investments, which enables different investors to choose different levels of risk and reward.
In the socially responsible investment movement, L3Cs are mostly useful for private foundations that would prefer to meet their exempt requirements through PRIs in order to gain a small financial return rather than donating 5% of their assets to nonprofit charities. Nevertheless, we should investigate the possibilities of utilizing L3Cs as an investment vehicle for college and university endowments. One possibility is that public universities whose state funding is supplemented with an endowment managed by a private foundation could encourage their foundation to invest in L3Cs. In addition, because L3Cs are required to serve social good but are allowed to earn a profit, they could prove to be an interesting model for providing employment in low-income communities through a for-profit community development venture. These sorts of community development L3Cs might end up serving a greater social good than many charitable nonprofits by providing meaningful employment to disenfranchised peoples. Private colleges and universities without foundations attached to them could use L3Cs as a vehicle for allocating 1% of their endowment in community investments . This would give another option for community investment besides revolving loan funds. L3Cs are still very new and are not yet widely utilized, but in the long term they could prove to be an important component of a diverse socially responsible investment portfolio.
- Americans for Community Development: About L3C
Vermont Secretary of State Corporation Database (search "L3C" to get a list of L3Cs in Vermont)
- Chicago Tribune: "New corporate structure could give social entrepreneurs new funding stream"
- Huffington Post: "How To Save Newspapers"
- Social Earth: "An Insider's Look at the L3C and What it Could Mean For You and Your Social Enterprise"
You can reach Jay Cassano at: email@example.com