Should colleges consider 'impact investing' for endowments?
- An investment strategy growing in popularity is "impact investment," or financing companies and private holdings with missions to achieve and expand social good through organic food or clean energy technology.
- Colleges' nonprofit status and earning potential are already enhanced by their missions to provide social good, so investing in campus and community-based ventures which can grow this mission could resolve much of the focus on endowment spending and returns.
- Middlebury College has already adopted similar investment strategies, and has grown its endowment by $42 million in the last five years.
Commonly, campuses grow revenue through philanthropy, real estate holdings, federal and state research grants, and small commercial development projects. But if schools began challenging stakeholders to develop technology, textiles or social services which benefit communities, it would provide strong answers to questions posed by the federal government about how elite endowments are maintained under nonprofit tax protections.
University leaders can build a legacy of entrepreneurship among students, faculty and staff by encouraging and rewarding innovation through the creation of maker spaces, like Clemson University and Howard University have done, or by offering tech credentialing add-ons to degree programs and continuing education opportunities.
Colleges and universities, could have major stakes in transforming companies and industries, much in the same way Under Armour was partially built through early investment from the University of Maryland, and how ESPN grew as a network in part because of its deal with the Big East Athletic Conference.
- U.S. Trust Investing for maximum impact