By the Dwight Hall Socially Responsible Investment Fund
New Haven, Connecticut – The Dwight Hall Socially Responsible Investment Fund has launched the first undergraduate-run socially responsible endowment investment in the country.
Developed by members of Dwight Hall’s student-run socially responsible investment (SRI) committee, the first of its kind in the country, the Market-Driven and Mission-Driven Portfolios aim to promote Dwight Hall’s social values while earning financial returns to support the Dwight Hall operating budget. The investments have been authorized by the Dwight Hall Board of Trustees.
The Dwight Hall Socially Responsible Investment Fund was created in 2007 by the Board of Trustees of Dwight Hall, Yale University’s umbrella organization for public service and social justice groups, to invest a portion of Dwight Hall’s endowment according to environmental, social, and corporate governance guidelines. As the first undergraduate-run socially responsible investment endowment in the nation, the Fund aims to bring Dwight Hall’s investment policy in line with its institutional commitment to social change. “The Dwight Hall SRI Fund is an innovative form of service that allows Dwight Hall to dedicate its resources fully to improving the communities in which it operates,” says committee chair Thomas Meyer ‘11.
Composed of about ten undergraduate students who receive mentoring from graduate students at the Yale School of Management, the Dwight Hall SRI Fund represents the nation’s first undergraduate socially responsible investment group whose returns are expected to support the institution with which it is affiliated. The Fund has become the leading student-run socially responsible investment initiatives in the country, and its combined market- and mission-based approach represents an innovative SRI model.
When compiling their Market-Driven Portfolio proposal, students considered the entire universe of socially responsible investment funds and applicable traditional funds, using funnel analysis to eliminate funds that did not meet the group’s needs. Positive and negative screening allowed students to evaluate the environmental, labor, and corporate governance policies of funds’ holdings. Funds with assets greater than $200 million under management were expected to engage in shareholder advocacy. Students also considered funds’ past performance, manager experience, duration of existence, investment strategy, and fee structure. Each fund in the portfolio is expected to perform in line with or outperform the standard benchmark of its asset class.
The Mission-Driven Portfolio consists of a $10,000 investment in a certificate of deposit at The Community’s Bank of Bridgeport, Connecticut. Chartered under the Community Reinvestment Act, the Bridgeport bank focuses on providing individuals underserved by the traditional banking community with access to credit. Both FDIC-insured and classified as a community development bank, The Community’s Bank met the group’s criteria for financial viability and social impact. The bank was selected after extensive research on investment options that would benefit the New Haven-area communities served by Dwight Hall.
Socially responsible investing refers to an investment strategy that seeks to maximize both financial return and social good, taking into account the social impact of a particular investment when making acquisition decisions. This approach has roots in investment strategies of nineteenth century American religious groups. It became increasingly prominent in the 1990s when institutional divestment of holdings with ties to South Africa—including at Dwight Hall—generated significant pressure to end apartheid. “With the support of hundreds of institutional investors representing trillions of dollars, responsible investment is playing a growing and prominent role in modern finance,” says committee member Aaron Podolny ‘12.
Following these initial investments, the Dwight Hall socially responsible investment committee will monitor the overall portfolio’s performance to ensure that it continues to meet their investment objectives. The group will also explore options for further mission-based community investments. A letter of intent has already been sent to help the First Community Bank of New Haven complete its federal chartering process. “It’s exciting to see the country’s first undergraduate SRI endowment move forward with an investment strategy that not only will help to support the programs that Dwight Hall runs but also will grow in a healthy and responsible way,” says Meyer.