This article was originally published in the February 2024 print edition.
A couple of years ago, media outlets including The Nation and The Washington Post were referring to the latest wisecrack (a clever or sarcastic remark) about Harvard University: the ivy-league institution had turned into a hedge fund with a university attached to it. Students called upon Harvard to ‘unhedge’ its endowment while others praised its financial planning strategies. An open letter in The Atlantic called it a ‘brand problem’ yet also a ‘literal truth.’ This characterization underscores a broader trend among universities and colleges, the apparent intent to accumulate the largest endowment ever seen. Maybe we should start thinking about how, and what we are getting this money for.
In recent years, the conversation concerning the intersection and contradiction between financial planning and institutional core values has regained cultural momentum as students throughout the country have called for their respective institutions to implement divestment strategies and take a closer look at the way colleges manage their investment portfolios.
Over the past year, there has been significant scrutiny regarding the ethical implications of Smith College’s asset management strategies. This focus has particularly centered on Smith’s choice to maintain investments in packages that include assets from defense contractors like L3Harris. Smith’s investment portfolio is ethically dubious. However, the issue of resource allocation at Smith extends further than that. Smith says our endowment is our future, but what about our present?
On Dec. 7, 2023, a faculty discussion led by Executive Vice President for Finance and Administration David DeSwert took place in Weinstein Auditorium. The panel, titled ‘Budget presentation to faculty from the President,’ opened with the college’s financial goals for the academic year, such as ‘responsible spending’ and ‘intergenerational equity.’ The presentation also featured a summary of the college’s spending and revenue for the fiscal year 2023. The college was said to be in a ‘strong financial position’ and has had a budget surplus for the last two years. Smith’s endowment, as of 2023, was $2.5 billion, and its operating budget in 2022 was approximately $285 million. Going by the numbers, we are doing great.
The numbers don’t really matter, though. During the faculty discussion, faculty complained specifically about the lack of support staff for faculty and the administrative overbloat. In recent years, students have voiced concerns about various issues, including insufficient funding for the Mwangi Center, understaffing at the Office of Disability Services (ODS), elevator malfunctions on campus, classroom leaks, inadequate staffing at the Schacht Center for Health and Wellness (Smith’s only health center, which currently operates from 9 a.m. to 4:30 p.m. and is closed on weekends), shortages in dining staff (recalling last year’s negotiations), insufficient housing and more.
If the numbers were representative of reality, Smith College dining staff wouldn’t be at a ‘breaking point’ due to understaffing every time contract negotiation comes around. Moreover, if this were the case, professors wouldn’t complain about hiring issues or lack of support staff. Vice President of Finance David DeSwert boasted that Smith spent most of its operating budget on compensation, but is this money spent on competitive salaries for academic faculty or the multiple six-figure salaries of administrative staff and their executive assistants?
During the COVID-19 pandemic, rather than implementing hiring freezes and cutting department costs, this is money that could have been used instead of invested in bonds and non-liquid assets. When money is directly invested into the college, it is in the form of a $32 million building to house ‘Student Leadership & Career Development services.’ This is no surprise, though, considering Smith’s 2022 financial reporting summary highlighted ‘career services’ and ‘sustainability initiatives’ as key strategic priorities for 2023.
It might be enough for donors throwing millions at the Lazarus Center for Career Development. For many students and I, though, graphs and data on a PowerPoint slide deck claiming financial success don’t make a difference. I am not a shareholder; I am a student who does not expect a high return over investment ratio, but a quality education at an institution that respects the people that make up the college’s “human-intensive environment.” The accumulation of wealth Smith is pursuing is to be perpetually built for a future we, current students, will not see become a reality. Our present is being forsaken for long-term investment returns.
Being conservative with our endowment is counterproductive. Instead of putting our money in a safe box, we should be making a bet with it: not on the market, but on the potential of students and faculty. We need to stop viewing our endowment as a piggy bank for the future and start seeing it as a source of possibilities for the present. Stop mitigating risks that an academic institution is meant to take: scholarships, research, expanding academic departments. Stop making risky bets on the market and start making risky bets on campus. Our endowment is worth nothing if it only serves the pages of a financial report.
