The Responsible Endowments Coalition (REC) reported that Oberlin College Board of Trustees has approved an Impact Investment Platform that “will combine socially responsible investing with student-trustee-administration collaboration.” This resolution is the result of pressure from the Oberlin Responsible Investing Organization (RIO), a student organization that is part of a broader national movement to encourage colleges and universities to invest their endowment dollars in a manner consistent with social and economic justice, sustainability, and their educational mission.
This is a very welcome development from Oberlin—an institution that has long been associated with progressive causes. It was the first college in the United States to adopt race-blind admissions and the first to permit coeducation in the late 1830s. Recently, in the summer of 2009, the college embarked on another ambitious initiative, aligning institutional resources to form the Oberlin Project. David Orr, a professor of Environmental Studies and Politics and Senior Adviser to the President at Oberlin, who also heads the projects, summarized the undertaking: “In affiliation with the city, we aim to revitalize the local economy, eliminate carbon emissions, restore local agriculture and forestry, and use the entire effort as an educational laboratory relevant to virtually every discipline.” Impact investing, which will hopefully include a local community investing component, is another significant step in the direction of full alignment.
Although Oberlin is just one institution, the decision provides a hopeful sign of an accelerating institutional shift toward greater socially responsible investment practices. A recent report by The Democracy Collaborative and REC, Raising Student Voices: Student Action for University Community Investment, hopes to both catalyze student involvement in these efforts and capture existing institutional involvement. The work profiles three administration-led initiatives and three student-led initiatives, as well as five potential future partnerships, whereby institutional investments are directed into local communities in a way that empowers low-income residents, develops small businesses, and generates sustainable economic development.
A tremendous opportunity exists. Higher education as a sector controls more than $400 billion in endowment assets, while also employing a workforce of nearly 4 million, enrolling 21 million students, and contributing $460 billion of annual activity to the US economy. Universities, whether spurred by enlightened self-interest or student agitation, can leverage this underutilized economic power to complement their academic missions with wider social missions that include local community and economic development.
Such an approach would be very much in line with the historic role of land grant universities that were intended to be engines of economic development for a different era, as well as providing access to higher education for those excluded previously because of their socioeconomic class. More recently, university students have won remarkable victories in pushing their institutions to engage in more ethical practices — including divestment from apartheid South Africa and the cancellation of contracts with retailers engaged in sweatshop production. Today, there are opportunities to work with groups like 350.org and REC in the effort to push for fossil fuel divestment on campuses across the country.
As institutions divest, it is important that they positively reinvest their resources, not merely avoiding environmental and social harm, but proactively seeking to help build healthy local economies. One way is by investing in community development financial institutions (CDFIs), which allows institutions to direct financial resources into the local community in a way that empowers low-income residents, small businesses, and sustainable economic development. With defined missions to provide financial services to underserved populations in a fair manner, investing in CDFIs seeks to ensure bottom-up sustainable community development by placing greater power and control in the hands of community actors themselves.
Duke University in Durham, North Carolina, for instance, has supported Durham’s Latino Community Credit Union and Self-Help Credit Union with a total investment of $12 million, aiding the credit unions in their efforts around affordable housing and neighborhood revitalization. Thus far, only a handful of higher education institutions have moved to directly invest their financial resources into communities to positively impact economic outcomes. Let’s hope that Oberlin’s new platform does just that, while also setting an example for other colleges and universities across the country.
If you would like to learn more about community reinvestment options, join REC for a call this coming Wednesday, November 20 at 8:30 pm. You can join the call online the day-of by clicking here, or you can call directly by dialing 213-416-1560 (passcode: 996 0839).