This week we continue our series on the complicated language of responsible investing by taking a closer look at Social Choice Funds.
Social Choice Funds are funds that seek to spur social change by investing alumni donations in companies that promote social justice, environmental sustainability, and other social goods. Among our peer schools, Brown and Harvard have taken the lead in establishing social choice funds. Read more below…
Brown’s social choice fund was established in 2007 after years of lobbying by students and alumni. Since Brown had already created an investment oversight committee that prevented the endowment from being invested in ethically questionable companies and funds, the goal of the social choice fund was to expand the University’s commitment by seeking out companies that took an active role in promoting positive change. But, Brown’s administration has set a $25,000 minimum for donating to their social choice fund. As such, the fund never took off. Instead of offering an appealing option for young alumni and other potential donors, the fund has only attracted a single donation.
Harvard, under extensive pressure from Responsible Investment at Harvard and other student groups, recently established a social choice fund of its own. Although not slated to be and up and running until July, Harvard’s social choice fund will have no minimum donation. Unfortunately, the new social choice fund has not received an adequate amount of internal support at the University. Currently, there are no efforts to actively solicit donations and the University’s decision to spend 20% of the fund each year signal a weak commitment to the fund’s long-term viability. As a result, the students leading Responsible Investment at Harvard have gone forward with their own social choice fund, returns from which will be donated should Harvard pledge greater support for the social choice fund.
UChicago, of course, does not have a social choice fund. But the fund aligns with many of the University’s core values and already existing practices. For one, a fund would follow the model of many programs at the University, including our commitments to CDFIs and public education, by showing support for a social goal without committing to solely supporting that goal. Instead, a social choice fund would simply offer donors the option to give their money to a fund that would invest it responsibly. In this way, the social choice fund would not violate the strictures of the Kalven Report. Additionally, a social choice fund may create new interest in donating among alumni concerned about our current investment practices. At the most fundamental level, a social choice fund is a big step towards responsible, accountable investing.
What do you think? Should UChicago get a social choice fund?