Becker College First Institution of Higher Ed to Invest Full Endowment Toward Benefit of Environment and Society
The trustees of Becker College today announced they have officially mandated that all investments in their endowment should generate a positive impact on society, as well as a targeted financial return. This makes Becker the first college or university to pursue a 100-percent impact strategy across its entire endowment, according to experts in the field.
“A 100-percent social impact goal for Becker’s endowment aligns with our mission of educating, preparing and transforming our students into global citizens, prepared to solve human, social and environmental problems,” said Dr. Robert E. Johnson, president of Becker College. “Pursuing both impact and financial return is entirely possible, as demonstrated by a large body of academic evidence.” (Oxford University meta-study of 180 academic papers on financial return and risk, linked to impact)
“Plus,” Dr. Johnson continued, “our new investment policy permits us to evaluate investing up to 25 percent of our endowment in local opportunities, including student-founded and alumni-run ventures, or local energy-efficient infrastructure.”
The completion date for the portfolio transformation of the school’s $5 million endowment is June 30, 2017, less than 15 months away. Trustee board chairman, Arthur P. DiGeronimo, said, “We set this aggressive milestone to strengthen and further demonstrate our total commitment to the highest possible standard of social and fiduciary stewardship.”
Experts say that in an age where students on more than 200 campuses are petitioning their school’s trustees to invest in a more environmentally and socially conscious way, including going “fossil-fuel-free,” the proactive investment policy adoption from Becker is surprisingly unique.
“This quantitative goal of 100-percent social impact for a college endowment is the first of its kind, to our knowledge, and Becker’s 2017 timeline shows a true dedication and commitment of its importance,” says Georges Dyer, of the Intentional Endowments Network, a coalition of more than 70 universities, colleges, foundations and investment professionals that seek both net positive impact on society as well as attractive financial returns in line with fiduciary duty.
While $530 billion is invested by college and university endowments, very few Boards of Trustees have sought to align their endowments with their mission in this way. Hampshire College in Amherst, Mass., adopted “Environmental, Social and Governance” (ESG) preferences in its investing strategy starting in 2011. A handful of schools have divested coal, oil and gas investments as part of the “fossil-fuel-free” movement. Yet Becker College is the first to specify that 100 percent of its investments should produce measurable positive “social impact,” including metrics on health, income equality, environment, diversity and transparency.
Becker officials said the investment portfolio’s impact will be rated by HIP Investor, an impact ratings and advisory firm, which quantifies net benefit to society, future risk, and financial return potential on nearly 5,000 global equities, 11,000 municipal bonds issued by governments and non-profits, and nearly 1,000 mutual funds. Since 2006, the HIP (“Human Impact + Profit”) ratings system has guided investors, advisers, fund managers and 401(k) plans on how to implement stronger, more resilient investment portfolios seeking positive impact, strong profit potential, and reduced future risk.
“Of course, investing for social impact benefits people and the environment–but increasing evidence also shows that financial returns can be just as high or higher, while financial risk can be equal or even lower,” said R. Paul Herman, CEO and founder of HIP Investor. “Becker College is a leader among institutional investors to mandate 100-percent impact across all its investments. This strongly aligns with the desires of alumni and students, especially Millennials.” [Herman is the author of the business best-seller and textbook, The HIP Investor: Make Bigger Profits by Building a Better World, (Wiley, 2010), part of the curriculum at 26 universities globally.]
Like all innovations, entrepreneurial spirit brought it together. Becker College trustee Christopher Provo began including social impact in his own investment practice, thanks to a partnership with Joy Poland of the More Value and Profit (MVP) initiative, which guides advisers and companies on how to integrate sustainability into business, investing and 401(k)s. With Becker College’s 2015 launch of a new social-business center affiliated with Nobel Peace Prize winner Muhammad Yunus, PhD, the opportunity for a 100-percent social impact endowment seemed a natural next step.
Innovating for social impact is a core theme of the 21st century. With entrepreneurial spirit, analytical rigor, and a focus on solving human, social and environmental challenges, Becker College’s endowment, empowered by HIP’s impact ratings, is demonstrating how to bring the power of 100-percent impact coupled with pursuing stronger financial returns to institutional investing.
NOTE: Muhammad Yunus will speak in person at the Becker College Presidential Speaker Series in Worcester, Mass., on Tuesday, April 5. To attend, RSVP here: http://www.becker.edu/about/president/speakerseries.