How Students Transformed $6 Billion Endowment

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Above photo: Duke students petition their university’s board for changes in investment practices. (Shayan Asadi)

Last October 4, a group of students clutching more than 2,000 petitions knocked on the door of the Duke University Board of Trustees meeting and requested an audience. Burly security guards barred the door on the order of vexed University President Richard Brodhead. Brodhead, visibly nervous, tried to usher the students out, calling their presence an “interruption.” Undeterred, the group resisted, asking for a chance to present the proposal they had spent almost a year crafting. The president, adamant in his refusal, returned to the meeting and shut the door.

Despite the hostile reception, a modified version of the students’ proposal—which called for the overhaul of the university’s guidelines on investment responsibility—had already found its way onto the board’s agenda. On October 4, 2013, the trustees voted to adopt the new guidelines, expanding the university’s investment oversight committee and establishing a special fund within the endowment—a Social Choice Fund—which will be invested only in prescreened, socially responsible funds.

Although the board rejected the students’ central request—the limited disclosure of the endowment’s investments—the new policy, in Brodhead’s words, reflects, “the most significant changes to our approach to socially responsible investment in almost a decade.” The board, in adopting these changes, not only affirmed the importance of socially responsible investing, but also revealed the tremendous power of thoughtful, impassioned and persistent student advocacy.

DukeOpen, the group that pushed the changes, formed in the spring of 2013 and consisted of just a small group of determined students for much of its year-long campaign. This group conducted research on investment practices at other universities, met with administrators and investment officials, and, over the course of several months, crafted a comprehensive proposal in support of greater endowment transparency and investment responsibility. Committed to the belief that a university’s investments matter, that where Duke chooses to invest its nearly $6 billion endowment has a significant material and symbolic impact in the world, DukeOpen set out to bring its proposal to the board of trustees.

In the naïve hope that we might forestall complications or delays, we sent our proposal to the board of trustee’s secretary, Richard Riddell, two weeks in advance of the deadline for submitting material to the May 2013 board meeting. Riddell swiftly redirected our proposal to the President’s Select Committee on Investment Responsibility, shuttling us into what would become a seemingly endless maze of administrative committees and confidential communiqués. Getting a proposal to the board, we discovered, would prove to be an extraordinarily complicated affair.

It was, however, precisely this complexity that we sought to remedy. For a decade, students concerned about investment responsibility had to shepherd proposals or ideas through two committees—the President’s Special Committee on Investment Responsibility (PSC) and the Advisory Committee on Investment Responsibility (ACIR)—secure a favorable recommendation from the president, and obtain the approval of the board of trustees. The process was made more onerous by the fact that the committees met infrequently and with no regularity. In an attempt to improve the process, we requested that each committee convene monthly and proposed more robust institutional support for groups concerned about investment responsibility.

But to make that happen, we first had to feel our way through the old process. We met with the PSC in early May, and after waiting nearly a month, learned from Provost Peter Lange that the committee would not issue a judgment on our proposal. The ball had bounced, Lange informed us, into the president’s court. Brodhead turned to the Duke University Management Corporation (DUMAC)—the company that manages Duke’s endowment—for advice. Officials at DUMAC eventually informed Brodhead that while few of Duke’s peer institutions practice endowment transparency, there was little evidence to suggest that disclosing small amounts of investment information would directly harm the endowment’s returns.

It seemed that, for Brodhead, endowment transparency was no longer about finances but reputation. By disclosing information about where and how Duke invests, university officials would risk exposing the institution to unwanted scrutiny and censure. Brodhead, swayed by a combination of reputational concerns and uncertainty about the financial impact of transparency, ruled out the possibility of disclosure in the immediate future and instead commissioned a yearlong study of the feasibility of endowment transparency.

Deferring the issue of transparency, but concerned for Duke’s fragile reputation, the president then tried to spin DukeOpen’s campaign into positive press for the university. To that end, Brodhead modified our proposal—excising our sticky request for greater endowment transparency—and scheduled a vote on investment responsibility for the rapidly approaching October board meeting. Shutting down what had only ever been a facsimile of negotiation, Brodhead planned to ask the board to adopt what was now a severely watered-down version of our original proposal. He was, in a sense, giving everyone a way to win: the university could collect reputational points for improving investment responsibility and DukeOpen could walk away with the majority of its proposals enshrined in Duke’s official investment policy.

The fight over transparency had, in Brodhead’s view, ended. But we refused to budge. We had squeezed as many concessions out of the administration as we were likely to get, but withholding our blessing for the watered-down reform ensured that the university would follow through on its lesser commitments, allowed us to demonstrate the widespread student support for endowment disclosures and left open the possibility of future student advocacy on transparency. So instead of endorsing Brodhead’s amended proposal, we decided to keep pushing, hoping to mark the historical record so that future activists could look to our campaign as a model of persistent, informed advocacy.

We shifted tactics, resorting to direct action after a year of negotiations and collegial exchanges. In the week before the board meeting, we amassed 2,000 petition signatures from a student body of roughly 6,500, wrapped the campus’s prominent statues in black plastic to symbolize the endowment’s lack of transparency, posted signs and banners and convinced hundreds of students to call the offices of top-level administrators. And, on October 4, a dozen smartly dressed students walked to the board meeting and knocked on the door.

Rumors of undercover police officers, waiting with plastic handcuffs in case of trouble, floated across campus. Brodhead, stepping out of the boardroom, looked as if he was scraping the very bottom of his deep lexical reservoir for words that could stay a conflict. What he and others in his administration failed to realize, however, was just how hard we had worked to apply pressure without offending, alienating or doing anything too radical. Because, in the end, we weren’t just pushing against Duke’s administration but our own peers, a group that could be so thoroughly ensconced in a bureaucratic model of social change, so afraid for its own reputation that edging even a little outside established institutional channels could seem dangerous, radical, unthinkable.

In the short-term, our campaign made an impact: the board adopted a modified version of our proposal and in doing so vastly improved Duke’s investment oversight structure. The ACIR now meets monthly, plans to conduct regular reviews of Duke’s holdings and has promised to establish clear and efficient mechanisms by which students can bring concerns about investments to the attention of the university.

These improvements, coupled with Brodhead’s commitment to a yearlong study of endowment transparency, represent a sea change in Duke’s approach to responsible investing. Instead of simply reacting to speculative complaints about its investments, Duke will now work proactively to ensure its practices are consistent with its 2004 commitment to investment responsibility. And, by the end of this year, Duke will decide whether or not some form of endowment transparency is feasible.

The success of the DukeOpen campaign cannot be understated. But to have any success at all we had to understand the system and become expert players in a game rigged against any team lacking resolve or savvy. Although security guards tried to block our march to the boardroom, our respectful tone, business attire and meticulously researched one-sheets made the threat of force look absurd. Security guards and plastic handcuffs may be able to slow down a movement, but they will never be able to silence modern student activists working on behalf of an idea whose time has come.