Why Endowment Ethics Are Essential To HBCUs

By Illai Kenney, REC Southeast Student Organizer

In America there are no true movements toward social change that are not impacted by young people.  This is more true than ever with the Socially Responsible Investment (SRI) movement.  The movement toward SRI  is fueled by the knowledge that how we use our money in investments has just as much impact as how we spend money daily and how we use economic leverage in politics.  Unfortunately, there are many people (young and old alike) who are unaware of this particular economic power.  The SRI movement seeks to enlighten them and recruit them into making strategic changes in how they impact the world .

Colleges and Universities in America are uniquely positioned to take part in this movement because they maintain endowments and have a large population of active young people.  What is an endowment?  An endowment is basically a school's savings.  It is the money the university puts into a "piggy bank" or invests in some way to save for the future.  All institutions invest their endowments and do everything possible to ensure that the money grows.  Historically Black Colleges and Universities (or HBCUs) are quite similar to other institutions in the ways they invest their endowments.  HBCUs differ from other universities because they usually have a mission that includes the development and advancement of African Americans, a strong commitment to social justice, and a student body that values and embodies this.  HBCUs are also different from other institutions because of the campus culture.  Their investments, as such, should reflect this.

Endowment ethics is key to HBCUs because they have a strong history of promoting justice and equality (look for this in my next blog!).  HBCUs are intrusted with the distinct duty of ensuring that they empower people of color and those negatively impacted by poverty and other injustices.  HBCUs have an opportunity to offer assistance to underprivileged communities by investing their money in a socially responsible manner.  The impact that HBCUs can have with their sizable endowments could change millions of lives for the better.  It is up to the students at HBCUs to ensure that their colleges and universities live up to the standard that has been set.  As students we owe it to ourselves and to our community to ensure that our universities invest in a socially responsible manner.

So, now that we know what SRI is and why it is important how do we do it?  Investing in a socially responsible manner can come in many different forms.  One of the most common ways is screening investments.  This simply means that a university would prevent their endowment money from being invested in companies that have ties to certain industries.  The most commonly screened is the Tobacco industry.  Another form of socially responsible investing is shareholder advocacy (SA).  SA is essentially owning a significant amount of stock or shares in a company that the university would like to see change and then assisting them in changing through shareholder resolutions and pressure from the university and other concerned shareholders.  Many HBCUs do not invest directly in companies (many use mutual funds as the primary form of investment) so other ways of socially responsible investing must also be utilized.  Another way to pursue SRI is to invest in community development.  Community development can mean a variety of things as well.  HBCUs are well known for investing in local businesses and providing a platform for small business owners to develop themselves.  Community development can also include banking with a community development credit union (which makes small loans to local people who would otherwise be denied the opportunity to flouish in business) among other ways of spreading funds.

Okay, so not that you've consumed all of this new information where do we go from here?  The first step is to get students, faculty, and staff on your campus to recognize the importance of SRI.  This shouldn't be too difficult because most of them in some way already do.  After there is recognition there must be action.  Even if the action is only freshening up the university's policy on investing it is a very worthwhile effort. Students on all HBCU campuses should be campaigning to make certain that their campus is doing its best to live up to its motto and improve the surrounding community and ultimately the world.  The legacy that any university has is created and maintained by its students.  HBCUs already have a legacy of SRI but it is up to us, the current students, to solidify and build upon it to ensure a better more sustainable future for  us all.

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