“Endowment Transparency”

A dispute erupted last month at Duke University when a student group increased its pressure on university officials to reveal how the school’s endowment is invested. The term is “endowment transparency.” Students are calling for it through petitions online.

One of the student leaders, quoted in a Duke Chronicle story, said that students “need to know where this money is coming from and how the University is investing the money.”

And why do the students “need” such information? Putting aside the obvious retort that they don’t actually “need” but merely want it, what’s the reason for making the demand?

For some years, activist groups pushing causes such as environmentalism, unionism, and various “social justice” concerns have been insisting that corporations and large non-profit organizations disclose many of their financial dealings to any and all “stakeholders.” They claim that people who are in some way connected to the corporation or non-profit are entitled to know how it is investing its funds.

Naturally, mere knowledge is not the ultimate goal of the activists. They are after influence on or even control over decision-making so they can steer money toward investments they like and away from those they don’t. They want to compel “socially responsible” investments. The campaign for “endowment transparency”—public information—is the camel’s nose under the tent.

One student promoting “transparency” wrote, “We know Duke is voting with its wallet…the question is, what is it voting for? If Duke is invested in corporations that use sweatshop labor, contribute to global warming or practice discriminatory hiring, members of its community have the right to know.”

Like many other universities, Duke has said no. A Web site under the name “The College Sustainability Report Card” grades colleges and universities on a host of criteria supposedly vital to “sustainability” and its average grade for endowment transparency was D+. Duke did slightly worse than that—a D.

Duke’s vice president for public affairs, Michael Schoenfeld, contends that if the university had to disclose all its endowment decisions, that would hinder its ability to maximize the return on its investments.

I think that’s true. Disclosure would inevitably lead to demands for participation by those activist groups claiming that they not only have the “right to know” but also the right to have a say. Valuable time could be lost while debating whether a proposed investment should be disallowed due to “sustainability” concerns of the activists. Buying or selling at the optimal moment might be lost if all the “stakeholder” groups have to give their blessing.

There is, however, a more fundamental reason for Duke or any other private university to say “no” when activists start demanding information. People and organizations are entitled to privacy. If they don’t want to let outsiders know things or participate in decisions, they don’t have to. That is different from public universities, where taxpayers are the owners and have greater rights to disclosure.

The students who demand “transparency” are arguing that simply by virtue of having enrolled at Duke and become part of its “community,” they are entitled to determine what information the university will disclose. That argument is wrong. The relationship between the school and its students does give them certain rights—to take classes, to be on its grounds, and use certain facilities—but that is as far as it goes.

Being a student at a college or university no more gives you the right to define what the school must do than being a customer in a store gives you the right to define what the company that owns it must do.

Or try turning the students’ demand around and imagine the reaction if the university said that because students are part of “the community,” they have to disclose to school officials private details about themselves and their conduct. Undoubtedly, most students would say, “That’s none of your business.” They would be right. They’re entitled to draw the line and decline to cooperate with demands that cross it.

Activists have the right to ask for anything. They also have to accept “no” when that’s the answer.