Understanding our endowment

By Editorial

Santa Clara currently has an endowment of around 533 million dollars. Have you ever wondered how it works? A report by the College Sustainability Report Card from fall gave Santa Clara a D in endowment transparency. That got us wondering-- as students, what is our relationship to the endowment?

As part of his final farewell to the university back in December, former President Paul Locatelli, S.J., announced that the university's endowment was in a state of decline, and the following year's budget would be affected.

In writing a story on this in fall, one of The Santa Clara's news reporters attempted to reach John Kerrigan, the chief investment officer for the university. That reporter never did manage to reach Kerrigan for comments about the endowment.

When The Santa Clara's editor in chief recently contacted Kerrigan, however, he was more than willing to answer our questions.

In explaining the lack of endowment transparency, Kerrigan stated, "If somebody had an appreciation for the data or a willingness to understand the endowment and the investment process, then time permitting, I'm working to discuss through mechanics and be quite transparent. It's not like we're trying to hide something from anybody, we just have an investment office to run."

Among other things, Kerrigan explained that every year, 4.5 percent of an average of the last three years of the endowment is used for the university operating budget. When we pay tuition, our funds are not directly added to the endowment. On the contrary, financial aid is supplemented by the funds that come from the endowment. So are we investing in the university?

Kerrigan said it was more the other way around. Much of student's financial aid is dependent on money from the endowment. "But it's a cycle," he said. "Obviously, the students are key parts to the school's mission. It's not like the arrow is one way versus the other. Ultimately the school hopes that they have a good, formative experience and that they will be the future owners of the school."

Despite having our questions about the endowment answered, we still feel more transparency is needed to safeguard against unethical investments.

Santa Clara's ethical investment policy, which received an A from the College Sustainability Report Card, gives us high hopes. We just hope that Santa Clara's ambitious policy is living up to its Jesuit ideals.

In May of 2006, The Santa Clara broke a story that relayed an investment in Massey Energy Company, a mining company that uses an environmentally destructive process known as mountain top removal.

When President Michael Engh, S.J., announced in his state of the university speech in February that he had cancelled an investment in the endowment that did not fit into the university's ethical investment policy, we started wondering how Santa Clara's investments are managed. Though we believe the university genuinely strives to make ethical investment decisions, investments like Massey Energy can still fall through the cracks.

The way we see it, the endowment is a mutual investment between us, the students, and the university. While we applaud Santa Clara's investment in students, we also feel that students deserve to know what investements are part of our endowment.

In this, transparency is key.