Georgetown University Admits Complete Lack of Oversight of Endowment Investments
Yesterday morning, five members of the Georgetown, Divest! Coalition met with four Georgetown University administrators, Lawrence Kochard, the Chief Investment Officer, LaMarr Billups, Assistant Vice President of Business Policy Planning, Dan Porterfield, Senior Vice President for Strategic Development, and Jeanne Lord, Associate Vice President of Student Affairs.
In a meeting that lasted for over an hour, the coalition members and the administrators discussed Georgetown University’s investment strategy and whether it addresses concerns of social responsibility. CIO Larry Kochard emphasized that Georgetown University generally does not directly invest in individual companies, but rather in funds overseen by managers whose actions are guided by certain allocation and risk policies set forth by the Investment Office. Therefore, he argued, Georgetown University cannot divest from the several companies the coalition is highlighting, because the University is not directly invested in them.
The university officials further distanced themselves from statements on the Investment Office’s website surrounding ethical oversight of the endowment. The website declares that “Georgetown is strongly committed to investing in a socially responsible manner” and, to that end, has created a Committee on Investments and Social Responsibility with a mandate to review all “shareholder proposals on social responsibility.” Dr. Porterfield described this language as outdated and not in line with how the university’s processes function today. Mr. Kochard went further in suggesting that no process exists to ensure ethical oversight over the investments made by fund managers. Instead, he encouraged the coalition to focus on investments made by GUSIF, the Georgetown University Student Investment Fund, which has a total investment budget of $350,000, as opposed to the University endowment that surpasses $1 billion. When Mr. Kochard was asked how the University ensures that its managers are investing in a socially responsible manner, he pointed out that the Investment Office “does its due diligence” prior to hiring fund managers, and that these are people he “trusts.”
Coalition leaders left the meeting convinced that ethical concerns play no role in the way the university invests its endowment. The administration has put forth the argument that the supposed necessities of modern investment for large endowments means that “company-by-company” investigation of social responsible practices is no longer feasible. Indeed, the Chief Investment Officer Mr. Kochard admitted that it is often impossible to know what companies the funds are investing in, as they are considered “trade secrets.” This complete lack of oversight is unacceptable and contradicts the University’s foundational ethics of social responsibility.
Furthermore, referencing the STAND-led campaign focused on investments in Sudan, Mr. Kochard disputed that the University had released any statement of divestment from companies operating in Sudan. Indeed, upon review of University statements released at the time, it appears that the University used this loophole of “direct investment” versus investment through fund managers to mislead the student body into believing that action had taken place and silence student advocates. The university rarely invests directly in individual companies, so its April 2008 declaration that it had zero direct investment in companies operating in Sudan had no functional impact. Georgetown, Divest! will not accept such an outcome and will fight to ensure that the university lives up to the spirit upon which it was founded.